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 OF 1934
 For the fiscal year ended June 30, 2005
 Commission file number 0-28800
 DRDGOLD LIMITED
   REPUBLIC OF SOUTH AFRICA
  299 PENDORING AVENUE, BLACKHEATH, RANDBURG, 2195, SOUTH AFRICA
   None
  None
  None
   As of June 30, 2005, the Registrant had outstanding 296,206,048 ordinary shares, of no par value.
  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


TABLE OF CONTENTS
 Page
 PART I


PART II
                            PART III


1
 Preparation of Financial Information
  there. Accordingly, our books of account are maintained in South African Rands. Our financial statements attached hereto are presentedin United States Dollars and unless otherwise stated herein, in accordance with generally accepted accounting principles in the UnitedStates, or US GAAP. All references to “Dollars” or “$” herein are to United States Dollars, references to “Rand” or “R” are to SouthAfrican Rands, references to “A$” are to Australian Dollars, references to “F$” are to the Fiji Dollar, and references to “Kina” or “K” areto Papua New Guinean Kinas.
  Dollars or Kinas has been translated into Dollars. Unless otherwise stated, the conversion rates for currency translations for the 2005fiscal year are R6.684 per $1.00, A$1.313 per $1.00 and K3.115 per $1.00, which reflect the noon buying rate in New York City atJune 30, 2005. For statement of operations amounts, the average conversion rate for Rand during the 2005 fiscal year of R6.222 per $1.00is used. The rates used for currency translations for transactions occurring during the 2004 and 2003 fiscal years are the respective yearend exchange rates for balance sheet amounts and the average exchange rate for that year for statements of operations amounts. Byincluding convenience currency translations in this Annual Report, we are not representing that the Rand, Australian Dollars or Kinasamounts actually represent amounts shown in Dollars or that these amounts could be converted at the rates indicated into Dollars.
 DRDGOLD Limited
   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 usthat 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 forward-looking phrases such as “anticipates,” “believes,” “could,” “estimates,”“expects,” “intend,” “may,” “should,” or “will continue,” or similar expressions or the negatives thereof or other variations on theseexpressions, or similar terminology, or discussions of strategy, plans or intentions. These statements also include descriptions inconnection with, among other things:
            Many factors could cause our actual results, performance or achievements to be materially different from any future results, performanceor 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 risk factors are not necessarily allof the important factors that could cause our results to differ materially from those expressed in any forward-looking statements. Otherunknown 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 orcircumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.


Imperial units of measure and metric equivalents
 Units stated in this Annual Report are measured in Imperial and Metric.
 Metric
 Imperial
 Imperial
 Metric
 1 metric tonne
 1.10229 short tons
 1 short ton
 0.9072 metric tonnes
 1 kilogram
 2.20458 pounds
 1 pound
 0.4536 kilograms
 1 gram
 0.03215 troy ounces
 1 troy ounce
 31.10353 grams
 1 kilometer
 0.62150 miles
 1 mile
 1.609 kilometres
 1 meter
 3.28084 feet
 1 foot
 0.3048 metres
 1 liter
 0.26420 gallons
 1 gallon
 3.785 liters
 1 hectare
 2.47097 acres
 1 acre
 0.4047 hectares
 1 centimeter
 0.39370 inches
 1 inch
 2.54 centimetres
 1 gram/tonne
 0.0292 ounces/ton
 1 ounce/ton
 34.28 grams/tonnes
 0 degree Celsius
 32 degrees Fahrenheit
 0 degrees Fahrenheit
 - 18 degrees Celsius


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 the 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 perounce are calculated by dividing cash costs by ounces of gold produced. Cash costs per ouncehave been calculated on a consistent basis for all periods presented. This is a non-US GAAPfinancial measure and should not be considered a substitute measure of costs and expensesreported 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.
 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 a 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 .....................................  Total Ore Reserves of wholly-owned subsidiaries and our 20% 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 samplingand (b) the sites for inspection, sampling and measurement are spaced so closely and the geologiccharacter is so well defined that size, shape, depth, and mineral content of Ore Reserves arewell-established.


4
  that used for Proven Ore Reserves, but the sites for inspection, sampling, and measurement arefarther apart or are otherwise less adequately spaced. The degree of assurance, although lowerthan that for Proven Ore Reserves, is high enough to assume continuity between points ofobservation.
    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
  
   equipped with a hoist system that lowers and raises a cage in the shaft, transporting equipment,personnel, materials, ore and waste.
 
 make room for subsequent mining activities. Most of the blasted ore is left to accumulate in thestope 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. Totalcosts per ounce have been calculated on a consistent basis for all periods presented. This is anon-US GAAP financial measure and should not be considered a substitute measure of costs andexpenses 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


5
 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 2003 are derived from our consolidated financial statements set forth elsewhere in this Annual Report, which have been prepared inaccordance with US GAAP. These consolidated financial statements have been audited by KPMG Inc. The selected consolidatedfinancial data as of June 30, 2002 and 2001 (as restated) and for the years ended June 30, 2002 and 2001 (as restated) are derived fromaudited 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 andProspects” and with the consolidated financial statements and the notes thereto and the other financial information appearing elsewhere inthis Annual Report.


6
 Selected Consolidated Financial Data
 (in thousands, except share, per share and ounce data)
 Year ended June 30,
 2005
 2004
 1 2
 2003
 1 2
 2002
 2
 2001
 2
 (as restated)
 (as restated)
 (as restated)
 (as restated)
 $’000
 $’000
 $’000
 $’000
 $’000
 Consolidated Statement of Operations DataRevenues
  .......................................................................
            .
             ...
      .
                         .
                                              Consolidated Balance Sheet DataCash and cash equivalents .............................................
                        .
                  Non-US GAAP Financial DataWorking capital..............................................................
       3
        3
        3
        4
        4
        4
       1
 The selected consolidated financial data for fiscal 2004 and 2003 has been restated for the equity method of accounting of our investment in
 Emperor Mines Limited.
 2
 The selected consolidated financial data for fiscal 2004, 2003, 2002 and 2001 has been restated for the disclosure of Buffelsfontein Gold Mines
 Limited as a discontinued operation.
 3
 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 for fiscal 2005, 2004 and 2003 see Item 5A.: “OperatingResults.”
 4
 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 for fiscal 2005, 2004 and 2003 see Item 5A.: “OperatingResults.”


7
 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 theimpact 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.
  condition has been and could be materially harmed in the future by an appreciation in the value of the Rand. For our South AfricanOperations, the continuing appreciation of the Rand since December 2001 has resulted in a sustained reduction in revenue received byus in Rands. These circumstances most adversely affected the North West Operations during fiscal 2005. After undergoing variousrestructuring activities due to high underground operating costs, in addition to reporting a net loss of $48.9 million for the six monthsended December 31, 2004, compounded by the collective negative impact of a series of events that culminated in a devastatingearthquake, Buffelsfontein Gold Mines Limited (a wholly owned subsidiary of the Company and operator of the Buffelsfontein andHartebeestfontein mines better known as the North West Operations) was placed into provisional liquidation on March 22, 2005. Dueto the marginal nature of our mines in South Africa, any sustained decline in the market price of gold, in Rand terms, below the cost ofproduction, could result in the closure of our other South African mines which would result in significant costs and expenditure, forexample, incurring retrenchment costs earlier than expected, that would negatively and adversely affect our financial situation.
 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 themarket on the date of trade. If the Dollar gold price should fall and/or the regional functional currencies should strengthen against theDollar, resulting in revenue below our cost of production and remain at such levels for any sustained period, we may experience lossesand 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 mayincur during that period or maintain adequate gold reserves for future exploitation.
  appreciated against the Dollar by 9.8%, 23.9% and 11.0 %, respectively (based on average exchange rates for each year). As at June 30,2005, the Rand had appreciated by 50.3% since reaching R13.44 = $1.00 in December 2001 (based on closing rates). In fiscal 2005 and2004, the Kina also appreciated against the Dollar by 3.9% and 13.7% respectively and in fiscal 2003 depreciated against the Dollar by5.9% (based on average exchange rates for each year).
  continue to result in a decrease in profitability. In fiscal 2005 and 2004, 57% and 71% of production (including the discontinuedoperation), respectively, was from South African mines providing significant exposure to the strengthening of the Rand and a decrease inprofitability. If the Rand continues to appreciate in such a manner, our South African Operations could continue to experience a reductionin cash flow and profitability.


8
 We have a history of losses and may continue to incur losses in the future
  we may still continue to incur losses in the future. Our profits and cash flows of the South African Operations are directly exposed to thestrength of the Rand and higher input costs as we generally do not hedge against currency fluctuations. These mines are also regarded asolder, generally higher cost gold producers. In addition to our ability to identify Ore Reserves that can be mined economically and tomaintain sufficient controls on production and other costs, exchange rate fluctuations will have a material influence on the future viabilityof these mines.
 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 financingand we cannot guarantee that any such financing would be on acceptable terms, or would be permitted under the terms of our existingfinancing arrangements. In the absence of such financing, our ability to respond to changing business and economic conditions, makefuture acquisitions, react to adverse operating results, meet out debt service obligations and fund required capital expenditures orincreased working capital requirements may be adversely affected.
 The failure to discover or acquire new Ore Reserves, particularly outside South Africa, could negatively affect our cash
 flow, results of operations and financial condition.
  acquisition efforts and our ability to replace depleted South African reserves with reserves offshore. In fiscal 2005, our Ore Reservesdecreased by 49.1% from 11.0 million ounces at June 30, 2004 to 5.6 million ounces at June 30, 2005, primarily as a result of placing theNorth West Operations into provisional liquidation and losing access to its ore reserves and because the strength of the Rand caused adecline in the Rand gold price. Mining higher grade reserves in our South African mines is likely to be more difficult in the future andcould result in increased production costs and reduced profitability. A failure to discover or acquire new reserves in sufficientquantities to maintain or grow the current level of our reserves will negatively affect our future cash flow, results and financialcondition. There can be no assurances that any new or ongoing exploration programs will result in new mineral producing operations.
 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 ormining 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 fitour strategy;
    we may need to use a combination of historical and projected data in order to evaluate the financial and operational feasibilityof the target assets. These analyses are based on a variety of factors including historical operating results, estimates of andassumptions about future reserves, cash and other operating costs, metal prices and projected economic returns andevaluations of existing or potential liabilities associated with the property and its operations. Other than historical operatingresults, 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 financialposition, particularly if the Rand continues to strengthen 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 businessacquired is not realized;
  we could experience financial loss through costs incurred in evaluating and pursuing failed acquisitions or overpayment foran acquisition; and


9
         We do not control the operations at CGR, including the Crown and ERPM Sections, the Porgera Joint Venture or the
 Emperor Section.
  cannot unilaterally cause these entities to adopt a particular budget, pay dividends or repay indebtedness, including debt held by us.Because we do not control these entities, current management may not continue to manage these entities in a manner that is favorable tous. With a minority interest stake in these entities, our ability to raise funding is dependent on access to capital from their shareholders,joint venture partners or third party financiers. Decisions which reduce gold production, revenues or profitability, over which we have nocontrol, may serve to reduce our cash flows and decrease our profitability.
 Our production costs may fluctuate and have an adverse effect on our results of operations.
                       Increased production costs would affect profitability.
  African Operations have, and could in the future, increase at rates in excess of our annual expected inflationary increase and result in therestructuring of these operations at substantial cost. The majority of our South African labor force is unionized and their wage increasedemands are usually above the then prevailing rates of inflation. In October 2005, we entered into a two year wage agreement for theBlyvoor Section with the National Union of Mine Workers, or NUM, that provided wage increases of 6% as of July 1, 2005 and 6.5% asof July 1, 2006. Similar agreements for the Crown and ERPM Sections are currently being negotiated. In addition, we have receivednotification of price increases, far in excess of the current rate of inflation, to be imposed by our South African steel suppliers andparastatal entities which supply us with electricity and water. These, combined with the increase in labor costs, could result in our costsof production increasing above the gold price received. Discussions with suppliers to moderate price increases have so far beenunsuccessful. The costs of fuels, lubricants and other oil and petroleum based products have increased in fiscal 2005 as a result of thegeneral increase in the cost of crude oil in global markets.
  heavy lift helicopters. Approximately $79 per ounce, or 23.9%, of production costs relate to transportation, including the cost of JET A1fuel for the helicopters. In the event that the increase in crude oil prices continues, this will have a significant impact on production costsat the Tolukuma Section and will increase the cost of mining at our other operations.
  consumption associated with the Phase 2 expansion project. Power generation represents approximately 20% of the operating costs at theEmperor Section. Increasing production costs at this Section will negatively impact on the profitability of the Company.


10
 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 environmentalrehabilitation and reclamation. Our mining and related activities impact the environment, including land, habitat, streams andenvironment near the mining sites. Delays in obtaining, or failures to obtain government permits and approvals may adversely impactour operations. In addition, the regulatory environment in which we operate could change in ways that could substantially increasecompliance costs, therefore having a material adverse effect on our profitability.
  these liabilities and included them in the $22.6 million provision for the Group’s environmental rehabilitation, reclamation and closurecosts on our balance sheet as at June 30, 2005. However the ultimate amount of rehabilitation costs may in the future exceed the currentestimates due to influences beyond our control, such as changing legislation or unidentified rehabilitation costs. The closure of miningoperations, 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 aconsequence of the extensive damage caused by the earthquake, the No. 5 Shaft of the North West Operations was closed. There wascontinuing seismic activity in the area and on March 16, 2005, the Company closed the No. 2 Shaft because of concerns for the safety ofemployees. Seismic activity has had, and may continue to have, a harmful effect on our business.
 Our Papua New Guinea Operations are subject to environmental risks associated with tailings discharge.
  operations. Tailings are routinely discharged into the surrounding river systems in accordance with approved environmental waterdischarge permits issued by the Papua New Guinea Department of the Environment and Conservation under the Papua New GuineaEnvironmental Act 2000 and Regulations 2000. The Papua New Guinea Government has approved disposal into certain natural rivers asthe most appropriate method for treated tailings and soft incompetent waste rock because the mines are located in extremely ruggedmountainous terrain, subject to seismic activity, high rainfall and landslides, so construction of a tailings impoundment would be verydifficult and the risk of an engineering failure high.
  discharges are monitored in accordance with the terms of our approved environmental management monitoring program. Cyanideassociated with the tailings deposited is detoxified and cyanide levels are monitored daily. However, should we be unable to control thelevels of lead, mercury, arsenic or cyanide, it could pose potential adverse health risks to the surrounding communities and may result inus violating our environmental water discharge permit and may expose us to civil or criminal liability. While our Papua New GuineaOperations currently comply with the applicable license conditions accepted by the Papua New Guinea Government in granting approval,the eventual, cumulative environmental impacts could be greater than the estimates in, or contemplated by, the environmental plans andenvironmental management monitoring programs approved by the Papua New Guinea Government. In such event the Papua NewGuinea Government could require us to remedy such consequences and the costs of such remediation could be material. We have alsoencountered opposition from local people and landowners regarding our discharge of tailings. This opposition could cause delays orstoppages which could reduce our production capacity and results of operations.
  operational disruptions, especially if the government changes the method it requires for us to test tailings discharges, and may have amaterial adverse affect on our 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.
  from our workings could potentially rise to the surface or decant into surrounding underground workings or natural underground watersources. Due to the withdrawal of Government pumping subsidies at the Durban Deep and West Wits Sections, we have ceased activepumping of underground water at these sections. We expect that progressive flooding could eventually cause the discharge of pollutedwater to the surface and to local water sources.


11
  underground water levels not reach a natural subterranean equilibrium, and in the event that underground water rises to the surface, wemay face claims relating to environmental damage and pollution of ground water, streams and wetlands.
   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.
  planned production cycle under their previous owners, and our strategy has been to revive these assets through specialist planning andmining techniques. The ageing infrastructure and installations typical of these operations require constant maintenance and continuingcapital expenditure. This materially increases our operational costs. The mature state of these assets, coupled with the technology appliedin many of our installations was not regularly updated and accordingly has become obsolete compared to the technology used in moremodern mines. As a result the risk of technology failure is high, and the maintenance of these installations, costly.
  infrastructures, we inherently run the risk of exposure to greater health, safety and environmental liabilities which we closely monitor butare not always able to fully mitigate.
 Due to the nature of our business, our employees face health and safety risks.
  seismicity-related rockfalls. While seismic monitoring continues to be an invaluable tool in the management of seismicity, there is stillrisk of seismic induced fatalities occurring which we may not be able to prevent. Preventing occupational diseases such as tuberculosisand noise-induced hearing loss is a priority and is addressed through close adherence to legislated requirements. However, there has beenan increase year on year in employees suffering from these kinds of conditions. Mine and safety regulations of the countries in which weconduct our operations impose various duties on us at our mines and grant the authorities broad powers to, among other things, closeunsafe 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.
 If we are unable to attract and retain key personnel our business may be harmed.
  personnel including Mr. M.M. Wellesley-Wood, our Chief Executive Officer, and Mr. J.W.C. Sayers, our Chief Financial Officer (as ofSeptember 5, 2005). Factors critical to retaining our present staff and attracting additional highly qualified personnel include our ability toprovide these individuals with competitive compensation arrangements, equity participation and other benefits. If we are not successful inretaining or attracting highly qualified individuals in key management positions, our business may be harmed. We do not maintain “keyperson” life insurance policies on any members of our executive team. The loss of any of our key personnel could prevent us fromexecuting our business plans, which may result in decreased production, increased costs and decreased profitability.


12
 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. Wehave insured property, including loss of profits due to business interruption in the amount of $822.9 million (R5.5 billion). Claims foreach and every event are limited by the insurers to $74.8 million (R500.0 million). This policy is limited by initial deductible amountscovering 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 themaximum deductible of $4.5 million (R30.0 million). A specific limitation of $15.0 million (R100.0 million) applies for loss suffered orclaims as a result of any landslide at the Tolukuma Section, however, no cover will apply for any seismic event smaller than 4.5 on theRichter scale. General liability insurance cover is in the amount of $86.8 million (R580.0 million).
  pollution related accidents, for which coverage is not available. If we are required to meet the costs of claims which exceed our insurancecoverage, our costs may increase which could decrease our profitability.
 Failure to discover and remedy 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 remedy these material weaknesses and provide reliable US GAAP financialreports could have an adverse effect on our share price. Remedying these material weaknesses is challenging in light of the limitedavailability within South Africa, where our head office is located, of internal accounting employee candidates who have sufficientknowledge 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 ActionPlan (see Item 15: “Controls and Procedures”) which we have implemented as of the current year end. If we encounter any difficulties insustaining the application of our US GAAP Action Plan, or remedying any control weaknesses discovered, or any difficulties encounteredin their implementation, we could fail to meet our US GAAP reporting obligations. If we are unable to sustain our US GAAP ActionPlan, investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of ourshares.
 Risks related to the gold mining industry
 Changes in the price of gold, which in the past has fluctuated widely, are beyond our control.
    the physical supply of gold from world-wide production and scrap sales, and the purchase, sale or divestment by centralbanks of their gold holdings;


13
 The exploration of mineral properties is highly speculative in nature, involves substantial expenditures, and is frequently
 unproductive.
  the costs and results of our continued exploration and development programs. Gold mining companies undertake exploration activitiesto discover gold mineralization, which may give rise to new gold bearing ore bodies. Exploration is highly speculative in nature andrequires 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 discoveredmay not be of sufficient quantity or quality to be mined profitably. If we discover a viable deposit, it usually takes several years from theinitial 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 orcontinue mining. These estimates generally rely on scientific and economic assumptions, which in some instances may not be correct, andcould result in the expenditure of substantial amounts of money on a deposit before it can be determined with any degree of accuracywhether or not the deposit contains economically recoverable mineralization. Uncertainties as to the metallurgical recovery of any golddiscovered may not warrant mining on the basis of available technology. As a result of these uncertainties, we may not successfullyacquire additional mineral rights, or identify new Proven and Probable Ore Reserves in sufficient quantities to justify commercialoperations in any of our properties. Our mineral exploration rights may also not contain commercially exploitable reserves of gold. Thecosts incurred on unsuccessful exploration activities are, as a result, not likely to be recovered and we could incur a write-down on ourinvestment in that interest or the irrecoverable loss of funds spent.
 There is uncertainty in 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 notreflect 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 causeour results of operations and financial condition to decline. Moreover, if the price of gold declines, or stabilizes at a price that is lowerthan recent levels, or if our production costs, and in particular our labor costs, increase or recovery rates decrease, it may becomeuneconomical to recover Ore Reserves containing relatively lower grades of mineralization. Under these circumstances, we would berequired to re-evaluate our Ore Reserves. Short-term operating factors relating to the Ore Reserves, such as the need for sequentialdevelopment of ore bodies and the processing of new or different grades, may increase our production costs and decrease our profitabilityduring any given period. These factors have and could result in reductions in our Ore Reserve estimates, which could in turn adverselyimpact upon the total value of our mining asset base and our business and operating results.
 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 andevents 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 andother 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 ofsections or an entire underground mine;
        accidents caused from and related to drilling, blasting, removing, transporting and processing material, and the collapse of pitwalls and tailings dams; and
    and hazards not associated with open pit or surface rock dump and tailings dam retreatment operations. The level of seismic activity in adeep level gold mine varies based on the rock formation and geological structures in the mine. The occurrence of any of these hazardscould delay production, increase production costs and may result in legal claims.


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  excessive annual rainfall. The transport of supplies and employees to and from the mine site may be inhibited by incessant rain anddamage to roads. In addition, land movement caused by excessive rain may destabilize existing buildings and plant infrastructure andrestrict access into the mines.
  states, rising sea levels caused by the greenhouse effect are a major concern. Natural disasters of this type could potentially disrupt ourbusiness for an extended period of time and this is of particular concern in Fiji due to the island’s exposure to such disasters in thepast. 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 adequateeducation, health care, housing and other services, including water and electricity. Government policies aimed at alleviating andredressing the disadvantages suffered by the majority of citizens under previous governments may increase our costs and reduce ourprofitability. In recent years, South Africa has experienced high levels of crime. These problems have impeded fixed inward investmentinto South Africa and have prompted emigration of skilled workers. As a result, we may have difficulties attracting and retaining qualifiedemployees.
  high by 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 inconsiderable year on year increases in operational costs. In recent years, the inflation rate has decreased and as of June 2005, theConsumer Price Inflation Index, or CPIX, stood at 3.5%, down from 4.8% since June 2004. Analysts expect inflation to increase over thenext few months, partly in response to higher fuel prices. A return to high levels of inflation in South Africa, without a concurrentdevaluation 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 tointerruptions in the electrical power supply as a result of election-related vandalism in Papua New Guinea. There is also a risk that socialunrest and government intervention could be exacerbated during the mine closure process. Mine infrastructure, including power, waterand 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 thePorgera 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 afterrenegotiated, extended deadlines. This issue may become the subject of some political campaigning and canvassing in future elections.
  this mine to conduct its lawful operations. If at any time in the future permits essential to lawful operations are not obtained, orexemptions 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 minesincluding the Porgera Joint Venture. Any suspension of operations at the Porgera Joint Venture would decrease our attributableproduction and profitability.
  been deterred by macro-economic instability, prohibitive regulation, and poor human and physical capital. Additionally, Fiji has alsoexperienced periodic political volatility in recent years. The country experienced a coup d’etat in March 2000, and whilst the country’spolitical environment has stabilized since 2000 following the first free and fair general election held in late 2001, potential legislativereform under the new government could be imminent. The next elections in Fiji are expected to be held in August 2006.Changes to thecountry’s constitution or government regulations could affect the political or economic climate in Fiji.


15
 AIDS poses risks to us in terms of productivity and costs.
  exacerbated in the presence of HIV/AIDS, represent very serious health care challenges in the mining industry. HumanImmunodeficiency 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 towhich our mining workforce both within and outside South Africa is infected with HIV/AIDS is unknown at this stage. Papua NewGuinea has recently been identified as a high risk country for the HIV/AIDS pandemic and this could have a direct impact on ourworkforce and productivity in that country. The exact impact of increased mortality rates due to AIDS-related deaths on the costs of ouroperations is as yet undefined. The only available treatments for HIV/AIDS are anti-retroviral drugs, which slow down the advancementof the disease but do not present a complete cure for the disease. The cost and availability of anti-retroviral drugs could inhibit theintroduction of treatment programs at our mines in South Africa and Papua New Guinea to reduce the impact of HIV/AIDS on ourmining workforce and our businesses. The effects of the disease pose a risk to us in terms of the potential reduction in productivity andincrease 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 theimpact of mining operations on the environment. A variety of permits and authorities are required to mine lawfully, and governmentenforces 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 aperiod of five years to apply for the conversion of used old order rights, and one year for the conversion of unused old order rights. Wehave submitted a mining work program, whereby we substantiate the area and period of the new order rights and additionally, we mustbe in compliance with the requirements of the Mining Charter as described below. Once these periods have lapsed, the holders mayhave to compete to acquire the right to mine minerals previously held under old order rights. To the extent that we are unable to convertsome of our old order rights, we may have a claim for compensation based on expropriation. It is not possible to forecast with any degreeof certainty whether a claim will be enforceable against the state, and the extent to which we may be compensated. Factors that are takeninto account are market value, as well as the history of the 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 programsubmitted by an applicant does not substantiate the need to retain the area covered by the old order rights. The duration of the neworder rights will no longer be perpetual but rather, in the case of new order mining rights, for a maximum of 30 years with renewals ofup 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 neworder rights will only be transferable subject to the approval of the Minister of Minerals and Energy. Mining or prospecting mustcommence within one year or 120 days, respectively, of the mining right or prospecting right becoming effective, and must beconducted continuously and actively thereafter. The new rights can be suspended or cancelled by the Minister of Minerals and Energyon breach of or, in the case of mining rights, on non-optimal mining in accordance with the mining work program.
  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 underthe previous statutory regime are diminished, the operations of the MPRD Act may result in significant adjustments to our propertyownership structure, which in turn could have a material adverse effect on the underlying value of our operations.


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 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 expenditurerequired to sustain a mining operation over the life of the mine. This results in an additional tax benefit not afforded to other commercialcompanies. In addition, the South African Government has indicated that it is looking at a revenue based royalty for mining companies, asoutlined in the draft Mineral and Petroleum Royalty Bill, 2003, or Royalty Bill, which was released in March 2003 for comment. TheRoyalty Bill proposed a three percent royalty on gross revenue for gold mining companies. In conjunction with the South African MiningDevelopment Association we have made submissions to the government outlining our concerns about a revenue based royalty andrecommended a profit based royalty be introduced instead. In his budget speech in February 2004, the South African Finance Ministeracknowledged that the draft Royalty Bill may need some refinement, but also stated that government’s preference is for a revenue basedroyalty, with introduction of the royalty as of 2009. As at October 31, 2005, these issues were still under review. The introduction of theproposed revenue based royalty would have an adverse effect on the profitability 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 May1, 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/willingbuyer basis at fair market value. When considering applications for the conversion of existing rights, the State will take a "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 result in us losing our miningrights. We may incur expenses in giving additional effect to the Mining Charter and the “scorecard”, including costs which we mayincur in facilitating the financing of initiatives towards ownership by historically disadvantaged persons. There is also no guaranteethat any steps we might take to comply with the Mining Charter would ensure that we could successfully acquire new order miningrights in place of our existing rights. In addition, the terms of such new order rights may not be as favorable to us as the termsapplicable to our existing rights.
 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 landin South Africa as a result of past racially discriminatory laws or practices is granted certain remedies, including the restoration of theland. The initial deadline for such claims was December 31, 1998. We have not been notified of any land claims, but it is possible thatadministrative delays in the processing of claims could have delayed such notification. Any claims of which we are notified in the futurecould have a material adverse effect on our right to the properties to which the claims relate and prevent us using that land and exploitingany mineral reserves located there.
 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.
  of June 30, 2005, we employ and contract approximately 4,300 people. Of these, approximately 3,480 people are in South Africa, ofwhom, approximately 73% are members of trade unions or employee associations. This excludes all employees of our associates, CGRand ERPM. We have entered into various agreements regulating wages and working conditions at our South African mines. For Blyvoor,we have recently concluded these renegotiations to June 30, 2007. For ERPM and Crown, the current agreements were effective toSeptember 2005 and new agreements, to be effective from October 2005, are currently being negotiated. Unreasonable wage demandscould increase production costs to levels where our South African Operations are no longer profitable. This could lead to acceleratedmine closures and labor disruptions. We may also experience labor unrest at operations at which we have an equity interest. In particular,during October and November 2002, ERPM experienced some labor unrest during which several striking contract workers were woundedand two workers were killed by employees of a private security company. Our business could suffer if such activities are repeated.
  provide for mandatory compensation in the event of termination of employment for operational reasons and that impose large monetarypenalties for non-compliance with the administrative and reporting requirements of affirmative action policies could result in significantcosts to us. In addition, future South African legislation and regulations relating to labor may further increase our costs or alter ourrelationship with our employees.


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 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 theadministration of exchange control regulations. In particular, South African companies:
 
 
 
  plus 1 share interest can only be held subject to exchange approval. As at June 30, 2005, we hold 45.33% of Emperor and accordinglySARB may require us to divest our interest in Emperor if we do not acquire 50% plus 1 share interest in the future.
   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.
  market for our ADSs are the Nasdaq Capital Market (formerly the Nasdaq SmallCap Market). On a historical basis, the tradingvolumes and liquidity of shares listed on the JSE have been low in comparison with the Nasdaq Capital Market. For the 12 monthsended June 30, 2005, only 16% of our ordinary shares were publicly traded on the JSE. The limited liquidity of our ordinary sharestraded on the JSE could limit your ability to sell a substantial number of our ordinary shares on the JSE in a timely manner, especiallyby 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 ADSsmay decide to sell them at any time. Sales of our ordinary shares or ADSs, if substantial, or the perception that these sales may occurand be substantial, could exert downward pressure on the prevailing market prices for our ordinary shares or ADSs, causing theirmarket prices to decline. Trading activity of hedge funds and the ability to borrow script in the market place will increase tradingvolumes and may place our share price under pressure.
 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 ofassociation and by South African law. These rights differ in material respects from the rights of shareholders in companiesincorporated elsewhere, such as in the United States. In particular, South African law significantly limits the circumstances underwhich shareholders of South African companies may institute litigation on behalf of a company.


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 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 andexecutive officers are either wholly or substantially located outside the United States. As a result, it may not be possible for you toeffect 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 thesecurities 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 SouthAfrican 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, includingobservance of the rules of natural justice which require that no award is enforceable unless the defendant was duly served withdocuments initiating proceedings, that he was given a fair opportunity to be heard and that he enjoyed the right to be legallyrepresented 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 (asamended), of South Africa.
  the compensation is awarded. Although the award of punitive damages is generally unknown to the South African legal system that doesnot mean that such awards are necessarily contrary to public policy. Whether a judgment was contrary to public policy depends on thefacts of each case. Exorbitant, unconscionable, or excessive awards will generally be contrary to public policy. South African courtscannot enter into the merits of a foreign judgment and cannot act as a court of appeal or review over the foreign court. South Africancourts will usually implement their own procedural laws and, where an action based on an international contract is brought before a SouthAfrican court, the capacity of the parties to the contract will usually be determined in accordance with South African law. It is doubtfulwhether an original action based on United States federal securities laws may be brought before South African courts. A plaintiff who isnot 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 forthe purpose of use in South African courts. It is not possible therefore for an investor to seek to impose criminal liability on us in aSouth African court arising from a violation of United States federal securities laws.


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 ITEM 4. INFORMATION ON THE COMPANY
 4A. HISTORY AND DEVELOPMENT OF THE COMPANY
 Introduction
  extraction, processing and smelting. Our South African Operations consist of the deep-level Blyvooruitzicht Section and East RandProprietary Mine Section, in addition to the world’s biggest surface retreatment operation, the Crown Section. Our AustralasianOperations consist of the Tolukuma Section and our 20% interest in the unincorporated Porgera Joint Venture, or Porgera, both of whichare in Papua New Guinea, and a 45.33% interest in Emperor Mines Limited, or Emperor, as of July 30, 2004 (19.78% as of June 30,2004), which owns the Vatukoula gold mine in Fiji. We also have exploration projects in South Africa, Papua New Guinea and Australia,though our principal focus is on our operations in South Africa and Papua New Guinea.
  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 andproduced 22,958 ounces of gold. In South Africa, we have focused our operations on the West Witwatersrand basin which has been agold production region for over 100 years. The Blyvoor Section (acquired on September 15, 1997, in exchange for 12,693,279 of ourordinary shares) and North West Operations (until March 22, 2005 when Buffelsfontein Gold Mines Limited was placed into provisionalliquidation), which comprise of the Buffels Section (acquired on September 15, 1997, in exchange for 14,300,396 of our ordinary shares)and the Harties Section (acquired on August 16, 1999, in exchange for $7.4 million), are predominantly underground operating mineslocated within the Witwatersrand Basin, exploiting gently to moderately dipping gold bearing quartz pebble conglomerates in addition tocertain surface sources. The Crown Section (CGR was acquired on September 14, 1998, in exchange for 5,925,139 of our ordinaryshares) also located within the Witwatersrand Basin, exploits various surface sources, including sand and slime tailings deposited as partof previous mining operations. Since 1999, our focus has been to expand our operations outside South Africa and increase our productionbase from the Pacific Rim region. The Tolukuma Section (acquired from September 1999 to June 2001, in exchange for 8,125,082 sharesand $3.3 million in cash) provided an initial base in that region, and led to the acquisition of a 20% interest in the unincorporated PorgeraJoint Venture (acquired in October 2003, in exchange for 6,643,902 shares and $60.3 million in cash).
  (formerly the Nasdaq SmallCap Market), London Stock Exchange, the Marche Libre on the Paris Bourse, the Brussels Bourse in theform of International Depository Receipts, the Australian Stock Exchange, or ASX, the Port Moresby Stock Exchange in Papua NewGuinea (as from August 18, 2004), the Over The Counter, or OTC, market in Berlin and Stuttgart and the Regulated Unofficial Market onthe Frankfurt Stock Exchange.
  address is P.O. Box 390, Maraisburg 1700, South Africa. Our telephone number is (+27 11) 219-8700 and our facsimile number is (+2711) 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.


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 Important Events in Our Development Generally and in the Current Year
 Crown Gold Recoveries (Pty) Limited and East Rand Proprietary Mines Limited
  (Pty) Limited, or CGR. CCGR was incorporated in South Africa on May 23, 1997. Pursuant to a scheme of arrangement, we acquired100% of CCGR on September 14, 1998.
  Bathong Holdings (Pty) Limited, or KBH, and CCGR whereby, with effect from July 1, 2002, we sold 3% of the entire issued sharecapital of and shareholders loans held in CGR to KBH and 57% of the entire issued share capital of and shareholders loans held in CGRto 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 initialpurchase of 3% interest in CGR. According to the terms of the shareholders agreement entered into between these parties, the partiesagreed that IDC would not remain a shareholder in CGR, but would transfer its shares and claims held in CGR to KBH. Accordingly,IDC granted an option to KBH to purchase its shares and claims held by it in CGR subject to certain terms and conditions. The optionwas exercised by KBH in July 2002 and KBH is currently the owner of 60% of the entire issued share capital of and shareholders loansheld in CGR. CCGR holds 40% of the issued share capital of CGR, which has four wholly-owned subsidiaries, Crown Mines Limited,City Deep Limited, Consolidated Main Reef Mines and Estate Limited and East Rand Proprietary Mines Limited, or ERPM.
  shareholders’ claims of ERPM for a purchase price of $11.0 million. CGR’s acquisition of ERPM was approved by the South Africancompetition 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 the Blyvoor Section. We loaned CGR the sum ofR60.0 million ($8.0 million) to facilitate its acquisition of ERPM. We have subsequently loaned CGR an additional R9.9 million($1.3 million), which CGR in turn loaned to ERPM as working capital. As of June 30, 2003, the loan had been repaid in full. Surfacemining of the Cason Dump will continue, with treatment through the Knights plant for a further 5 years, based on the current rate ofproduction of approximately 150,000 tons per month.
  referred to as the Crown Section. The ERPM Section consists of an underground section and the Cason Dump surface retreatmentoperation. The underground mining operation at ERPM implemented a controlled closure program which was scheduled to close inMarch 2005. Following the retrenchment of 806 employees in August 2004 at a cost of $0.6 million (R3.7 million), the mine has achieveda reduction in costs coupled with improved productivity. As a result the original planned closure of the underground section has beenpostponed. The Cason Dump surface re-treatment operation will continue to operate until 2010 under the management of the CrownSection based on the current rate of production of approximately 150,000 tons per month. The Crown Section undertakes the retreatmentof surface sources deposited as tailing from non-operation mining sites across central Johannesburg.
  the acquisition by KBH of a 15% stake in our South African Operations. The intention of the transaction is to bring us into fullcompliance with the 10-year, 26% black economic empowerment equity requirement as stipulated in the Mining Charter.
  settled through the issue of 4,451,219 of our ordinary shares, which at the date of issue, represented approximately $4.3 million (R28.9million).
  KBH to cover all of our South African assets. The transaction has been facilitated by the IDC, which agreed to a debt restructuring inCGR.
  a
  cash payment of $2.0 million (R13.2 million), for an
  effective 15% interest in our wholly-owned subsidiary, Blyvooruitzicht Gold Mining Company Limited, or Blyvoor. The new structure results in
  Khumo Gold SPV (Pty) Limited, or Khumo Gold, acquiring initially, a 15% interest in a newly created vehicle, DRDGOLD South African Operations (Pty) Limited, or DRDGOLD
  SA, which holds ERPM, CGR and Blyvoor. We will retain an 85% interest.
  SA for $1.4 million (R9.3 million). This further equity tranche will include a 6% stake to be placed in a new Employee Trust. Thetransaction has been
  financed by the issuance of $4.8 million (R31.8 million) new Khumo Gold preference shares.


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  that Dr. M.P. Ncholo is also KBH’s Chairman, the transaction will meet the definition of a related party transaction. For further details,see Item 7: “Major Shareholders and Related Party Transactions.”
   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 MRPand our wholly-owned subsidiary, Dome Resources (PNG) Limited which was subsequently renamed DRD (Porgera) Limited.
  Joint Venture, which has fifteen mineral tenements which form part of the Porgera mine located in Papua New Guinea. The finalpurchase price of $77.1 million comprised $60.3 million in cash and 6,643,902 ($16.7 million) of our ordinary shares based on theprevailing market value on November 22, 2003, being the final settlement date. As at June 30, 2005, the Porgera Joint Venture is ownedby Placer Dome Limited (75%), DRD (Porgera) Limited (20%) and the MRE, on behalf of the Enga Provincial Governments andlandowners in Papua New Guinea (5%). An affiliate of Placer Dome Inc., Placer (PNG) Limited is the operator of the Porgera JointVenture and is subject to the control of a management committee made up of representatives of the joint venture partners, including oneof our representatives. The management committee is governed by an operating agreement that prevents the partners from actingunilaterally.
 Review and restructuring of South African Operations
  operations to profitability. A task team comprising of management, union representatives and labor was established to assess theproposals and make a final recommendation. On July 4, 2004, at the end of the process, ERPM's management and the consultative forumconcluded that continued mining of the underground section was not sustainable, even at a higher 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.Following the retrenchment of 806 employees in August 2004 at a cost of $0.6 million (R3.7 million), the mine achieved a reduction incosts coupled with improved productivity. As a result, the original planned closure of the underground section was postponed indefinitely.
  our North West Operations and at our Blyvoor Section designed to restore the operations to profitability. Proposals were received intoa consultative forum in which both management and organized labor participated, and was distributed to the Department of Labourand the Department of Minerals and Energy, for their input. At the Buffels Section, agreement was reached with all the relevantparties early in August 2004 to close the No. 9 Shaft, but to keep the No. 10 and 12 Shafts in operation on condition that certaindefined sustainability thresholds are met. This agreement resulted in the retrenchment of 120 employees at this mining operationduring fiscal 2005 at a cost of $0.6 million (R3.7 million). At the Blyvoor Section, the 60-day review was extended by two weeks toconclude on September 13, 2004. By October 5, 2004, 1,619 employees had been retrenched at a cost of $3.1 million, with possible futurerestructuring initiatives depending on the economic circumstances. In terms of the agreement organized labor recorded its commitment tocertain production targets, and undertook not to disrupt production for at least six months for reasons relating to restructuring of theoperations.
 Emperor Mines Limited (Emperor Mine, Vatukoula, Fiji)
    Emperor for approximately A$11.9 million ($6.7 million). By April 2003, we had increased our percentage holding in Emperor throughadditional 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, oureffective holding had decreased to 19.78% as a result of additional shares issued by Emperor during fiscal 2004. Given the size of ourholding, Emperor appointed two of our representatives to its board of directors in January 2003.


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  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 Emperorat approximately A$105 million ($79.8 million). On June 10, 2004, we announced a revised final offer of five of our shares for everytwenty two shares in Emperor held. The revised offer represented a 14% increase over the previous offer. On July 30, 2004, our offer toEmperor’s shareholders closed with us having received acceptances from Emperor’s shareholders representing approximately 25.55% ofEmperor’s issued capital, thereby increasing our shareholding in Emperor to 45.33%. Accordingly, we issued 6,612,676 shares inexchange 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 $1.3 million.
  as Managing Director of Emperor and our Divisional Director: Australasian Operations, Mr. R.L. Johnson as a Non-Executive Director ofEmperor. With effect from October 5, 2005, Emperor’s Board appointed our Chief Operating Officer, DRDGOLD Australasia, Mr. M.P.Marriott, as an Executive Director. On September 9, 2004, Emperor shareholders approved a resolution to remove two independentdirectors from the board of Emperor and to confirm Mr. R. Johnson’s appointment as a Non-Executive Director of Emperor. As a result,we have three of our representatives on the six member Emperor board, with Emperor’s independent Chairman having a casting vote. Atthe date of this annual report we did not have control over Emperor.
  levels of the Smith Shaft caused by significant water ingress after sustained heavy rainfall; the impact of high fuel prices on operatingcosts; and the failure of the Philip Shaft winder which suspended production for 4 weeks. The winder was repaired and production fromPhilip Shaft commenced in June 2005. The board and management have reviewed the impact of overall lost production including thesuspension of production from Philip Shaft. As a result, Emperor has finalized a plan to restore the Emperor Gold Mine to a positive cashflow. The plan involves total capital expenditure of $11.4 million (A$15 million) over the next 12 months which will reduce operatingcosts by approximately $7.6 million (A$10 million). The key objective of the plan is to increase development and to reduce dilution bybetter control of mining heights and thereby increase recovered grade.
  them to positive cash flow and creating a sustainable, long-term future for the company and its operations in Fiji. An A$10.0 millionConvertible Loan Facility was negotiated by the independent directors of Emperor. The financing package also includes an agreementwith ANZ Bank, subject to a number of conditions, to a restructuring of Emperor’s debt servicing obligations to assist them with theirrestructuring plan. The ANZ Bank has also consented to the Convertible Loan Facility and the related security. The Convertible LoanFacility was approved by the shareholders of Emperor on August 29, 2005 (we did not participate in the voting). In addition, in July 2005we entered into an operational support agreement with Emperor negotiated by its independent directors, pursuant to which we willprovide Emperor with management and technical services.
  time as Emperor completes its financial and operational restructuring, there remains a significant uncertainty as to whether Emperor willcontinue as a going concern and, therefore, whether it will realize its assets and extinguish its liabilities in the normal course of businessand at the amounts stated in the annual report.
  our wholly owned subsidiary, DRD (Isle of Man) Limited, or 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 Gold Mines Limited and all of our explorationtenements in Papua New Guinea. Currently we, through DRD (Isle of Man), hold a 45.33% interest in Emperor.
      an A$10.0 million ($7.6 million) convertible loan facility which DRD (Isle of Man) has advanced to Emperor, in terms ofwhich we can elect to convert such debt facility into additional Emperor shares at A$0.30 ($0.23) per Emperor share.


23
  million, which is subject to certain completion adjustments to reflect the change in the capital position of both Emperor and DRD (Isleof Man) between October 1, 2005, which is the effective date, and completion of the transaction. The purchase consideration will besettled by:
  the issue of 751,879,699 new Emperor shares to DRD (Offshore), issued at A$0.35 ($0.26) per share which currentlyequates to $200.0 million; and
                      completion of the transaction. The capital raising would take place in early 2006 and would be used for a variety of capital programsacross the three mines and to provide general working capital for Emperor. The capital raising will allow institutions to participate inEmperor and will dilute our shareholding.
 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 wascontinuing 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 MinesLimited, or Buffelsfontein (which owns 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 took control of the mine, whichamounted to $0.8 million (R5.1 million). We recognized a provision of $1.5 million (R9.0 million) for a social plan for employees, whichincludes counseling and reskilling programs, and we incurred legal and other costs of $0.5 million (R3.2 million). An insurance claim hasbeen submitted for damage caused by the earthquake, which will be paid out to the liquidators when approved.
  Buffelsfontein subject to certain conditions. These include indemnifying us against any liabilities or obligations that could arise relating toenvironmental rehabilitation and the management and pumping of underground water. The proposed scheme of arrangement wasconditional upon the following:
  Department of Water Affairs and Forestry, or DWAF, agreeing to substitute us with S&J to the extent that DWAF envisagedimposing further responsibility on us;
  the acceptance by the High Court of South Africa and the majority of Buffelsfontein’s creditors of a scheme arrangementproposed by S&J; and


24
  majority of Buffelsfontein creditors, including us, was approved and sanctioned by the High Court of South Africa. The order for theprovisional liquidation of Buffelsfontein was lifted by the High Court of South Africa on November 1, 2005 and all the conditions of thescheme have been met.
 Other
  registered in Singapore. It is intended that the establishment of the branch will facilitate our further expansion in the Australasian regionin line with our growth strategy.
    of a non-refundable fee of R1.5 million ($0.2 million), was granted an option to acquire the Durban Deep Section’s mine village forR15.0 million ($2.2 million). The option was exercised on November 19, 2005 and the option fee will be deemed part payment of thepurchase consideration.
  A$3.0 million ($2.3 million). In a separate transaction, we have also undertaken to, pursuant to any existing Allied shareholder electingnot to follow its rights, take up not more than 17,420,000 shares, to be issued by Allied to raise an additional A$7.0 million ($5.3 million)at an issue price of A$0,40 ($0.30) per share. Both these transactions are subject to South African Reserve Bank approval. The capitalraising, which represents approximately 17.5% of Allied's share capital will also be subject to Allied shareholder approval, which Alliedhas undertaken to seek to obtain by no later than January 20, 2006.


25
 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 enableclearer definition of the ore body and the portions with the potential to be mined. Geological techniques are constantly refined to improvethe economic viability of exploration and exploitation.
 Mining
    Our Metallurgical Plants and Processes
   Market
  Physical demand for gold is primarily for manufacturing purposes, and gold is traded on a world-wide basis. Refined gold has a variety ofuses, including jewellery, electronics, dentistry, decorations, medals and official coins. In addition, central banks, financial institutionsand private individuals buy, sell and hold gold bullion as an investment and as a store of value (the tendency of gold to retain its value inrelative 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 demandplay some part in determining the price of gold, this does not occur to the same extent as in the case of other commodities. Instead, thegold 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 andcurrency devaluation, gold is often seen as a safe haven, leading to increased purchases of gold and support for the price of gold.
  number of fundamental economic circumstances. While the gold price passed the $400 per ounce mark in the second half of fiscal2004, the first time since 1996, the rally did not have the momentum it needed to maintain this higher level. However, continuedinvestor dissatisfaction with the state of the global economy and currency markets finally saw the Dollar gold price breach the $400per ounce mark, where it has stayed since. While our offshore operations have received the full benefit of the higher Dollar gold pricefor the year, our South African Operations suffered due to the continued strength of the South African Rand against major currencies.Indeed the Rand has been one of the best performing currencies against the Dollar for the last two years. Only towards the end of thefourth quarter of fiscal 2005, did we see some benefit from a Rand weakened by interest rate cuts in South Africa and interest raterises in the US that closed the yield differential.


26
  Year ended June 30,
 2005
 2004
 1
 2003
 1
 $’000
 $’000
 $’000
         183,609
 183,254
 109,419
  we 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 mineral elements. The gold bars are sent to the RRL for assaying and finalrefining 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 asdelivery, for the London afternoon fixed Dollar price on the day the gold is sold, with the proceeds remitted to us in Rand within twodays. In exchange for this service, we pay RRL a variable refining fee plus fixed marketing, loan and administration fees. We currentlyown 3% (fiscal 2004: 10.6%) of RRL (which is jointly owned by South African mining companies). Mr. D.J. Pretorius, our Group LegalCounsel and General Manager Corporate Services, is a director of RRL.
  signed by us in December 2001. Proceeds for gold sold are received within two days of sale. The selling price is determined by theprevious day's London afternoon close Dollar price and we are paid in Dollars. We do not have an interest in N.M. Rothschild.
  Proceeds for gold sold are received within two days of sale. The selling price is determined by the spot price at the time of sale and we arepaid in Dollars. We do not have an interest in BankWest.
   Ore Reserves
  2004, in both imperial and metric units. Our Ore Reserves are comprised of the total Ore Reserves of our wholly-owned subsidiaries,as well as our 20% attributable share of the Ore Reserves of the Porgera Joint Venture. Our attributable 20% share of the Ore Reservesof the Porgera Joint Venture is based on the information disclosed by Placer Dome Inc. (which has a 75% interest in the Porgera JointVenture) in its annual report for the fiscal year ended December 31, 2004, as filed with the SEC on Form 40-F on March 3, 2005. ThePorgera Ore Reserves are estimated as at December 31, 2004, using appropriate cut-off grades associated with an average long-termgold price of 350 per ounce, and on the Australian Dollar and Kina average long-term exchange rates to the US Dollar of A$1.54 =$1.00 and K3.33 = $1.00.
  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 ourexisting rights to mine, or within the time period of assured renewal periods of our rights to mine. In addition, as of the date ofreporting, 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.
  with the South African Code for the Reporting of Mineral Resources and Ore Reserves, or SAMREC Code, together with theAustralasian Code for Reporting of Mineral Resources and Ore Reserves, or JORC Code, and the National Instrument 43-101Standards of Disclosure for Mineral Projects dated February 2001. The SAMREC Code is based on, and is comparable with the JORCCode. The SEC’s Industry Guide 7 does not recognize Mineral Resources. Accordingly, we do not include estimates of MineralResources in this Annual Report.
 1
 Revenue for fiscal 2004 and 2003 has been restated for the disclosure of Buffelsfontein Gold Mines Limited as a discontinued operation.


27
  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 formining. 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 fullpay-limit grade. The cut-off grade is based upon direct costs from the mining plan, taking into consideration production levels, productionefficiencies and the expected costs. We use the pay-limit to determine which areas to mine, as an overhead inclusive amount that isindicative 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. Thiscalculation also considers the previous three year's mining and milling efficiencies, which includes metallurgical and other mining factorsand the production plan for the next twelve months. Only blocks above the pay-limit grade are considered for mining. The pay-limit gradeis higher than the cut-off grade, because this includes overhead costs, which indicates the break-even position of the operation,specifically significant for marginal mines.
   The potential ore to be mined is well defined by an externally verified and approved geological model created using our miningsoftware;
      figures in accordance with industry practice, converting mineral deposits to an Ore Reserve through the preparation of a mining plan. TheOre Reserve estimates contained herein inherently includes a degree of uncertainty and depends to some extent on statistical inferenceswhich may ultimately prove to have been unreliable.
  mineralization or formations different from those predicted by past drilling, sampling and similar examinations, reserve estimates mayhave to be adjusted and mining plans may have to be altered in a way that might adversely affect our operations. Moreover, if the price ofgold declines, or stabilizes at a price that is lower than recent levels, or if our production costs increase or recovery rates decrease, it maybecome uneconomical to recover Ore Reserves containing relatively lower grades of mineralization.
  approximately R88,960 per kilogram ($381 per ounce) as determined from the three year historical average. At June 30, 2005, theRand gold price was R93,931 per kilogram. In respect of our Australasian assets:
  Ore Reserves for the Tolukuma Section were determined assuming a gold price of K1,312.50 per ounce ($381 per ounce);and
  Ore Reserves in respect of our 20% attributable interest in the Porgera Joint Venture, are as determined by Placer Dome Inc.and as set forth in its annual report for the fiscal year ended December 31, 2004, and filed with the SEC on Form 40-F onMarch 3, 2005, assuming an average long-term gold price of $350 per ounce and exchange rates of A$1.54 = $1.00 andK3.33 = $1.00.
  approximately R90,023 per kilogram as determined from the three year historical averages in accordance with SEC Industry Guide 7.Based on the average exchange rate for fiscal 2004 the assumed Dollar gold price would be approximately $400 per ounce. In respectof our Australasian assets, Ore Reserves for the Tolukuma Section were determined assuming a gold price of $400 per ounce at anexchange rate of K3.22 = $1.00 based on the Kina gold price and exchange rate as at June 30, 2004.
  June 30, 2004, of 11.0 million ounces, other than depletion, is largely due to a decrease of 5.1 million ounces, or 46%, of the OreReserves at the North West Operations as a result of the provisional liquidation of Buffelsfontein Gold Mines Limited.


28
  Underground
 Surface
 Mine
 2005
 2004
 2005
 2004
 South AfricaBlyvoor Section .........................................
      1
       1
      AustralasiaEmperor Section
 2
            3
       1
 The results of the Crown Section and its subsidiary ERPM are accounted for using the equity method.
 2
 The results of the Emperor Section are accounted for using the equity method with effect from July 30, 2004. The results for fiscal 2004 and 2003
 have been restated for the equity method of accounting for our investment in the Emperor Section.
 3
 Our 20% interest in the Porgera Joint Venture was only acquired with effect from October 14, 2003.


29
  At June 30, 2005
 At June 30, 2004
 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
                            Total Blyvoor Section
 38.53
 0.08
 3,173
 4.57
 0.18
 825
 42.93
 0.08
 3,586
 3.78
 0.20
 743
  1
        Total Buffels Section
 0.06
 0.20
 12
 -
 -
 -
  1
               Total Harties Section
 15.35
 0.22
 3,346
 8.58
 0.20
 1,689
 Papua New Guinea Operations
                                         Total Porgera Section
 2
  10.17
 0.10
 980
 2.05
 0.18
 371
 12.11
 0.09
 1,145
 2.25
 0.13
 292
                                         Total Tolukuma Section
 0.18
 0.52
 96
 0.28
 0.18
 122
 0.28
 0.57
 159
 0.10
 0.43
 44
 Total: Group.............................................Underground ..............................................
       29.44
 0.23
 6,640
 12.99
 0.20
 2,609
                           Total
 3
  48.88
 0.09
 4,249
 6.90
 0.19
 1,318
 70.73
 0.12
 8,248
 14.72
 0.19
 2,768
 1
 The North West Operations were placed into provisional liquidation on March 22, 2005.
 2
 Total Proven and Probable Ore reserves for 2005 reflect our attributable interest in the Porgera Joint Venture. This is based on the information disclosed by Placer Dome Inc. (which has a 75%
 interest in the Porgera Joint Venture) in its Annual Report for the fiscal year ended December 31, 2004, as filed with the SEC on Form 40-F on March 3, 2005.
 3
 The Ore reserves listed in the above table are estimates of what can be legally and economically recovered from operations, and, as stated, are estimates of mill delivered in tons.


30
  At June 30, 2005
 At June 30, 2004
 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
                            Total Blyvoor Section
 34.952
 2.82
 98.700
 4.144
 6.19
 25.645
 38.946
 2.86
 111.544
 3.432
 6.73
 23.110
  1
        Total Buffels Section
 0.057
 6.82
 0.389
 -
 -
 -
  1
               Total Harties Section
 13.922
 7.47
 104.059
 7.784
 6.75
 52.548
 Papua New Guinea Operations
   0.371
 7.43
 2.756
 1.034
 8.21
 8.491
                                 Total Porgera Section
 2
  9.224
 3.30
 30.480
 1.856
 6.21
 11.533
 10.982
 3.24
 35.629
 2.045
 4.44
 9.082
                -
 -
 -
 -
 -
 -
                    Total Tolukuma Section
 0.166
 17.84
 2.980
 0.261
 14.58
 3.810
 0.256
 19.37
 4.956
 0.093
 14.79
 1.382
 Total
                                        Total
 3
  44.342
 2.98
 132.160
 6.261
 6.55
 40.987
 64.163
 4.00
 256.577
 13.354
 6.45
 86.122
 1
 The North West Operations were placed into provisional liquidation on March 22, 2005.
 2
 Total Proven and Probable Ore reserves for 2005 reflect our attributable interest in the Porgera Joint Venture. This is based on the information disclosed by Placer Dome Inc. (which has a 75%
 interest in the Porgera Joint Venture) in its Annual Report for the fiscal year ended December 31, 2004, as filed with the SEC on Form 40-F on March 3, 2005.
 3
 The Ore reserves listed in the above table are estimates of what can be legally and economically recovered from operations, and, as stated, are estimates of mill delivered in tons.


31
  Underground
 Surface
 Mine
 Dilution
 (Sundries,
 Shortfall and
 Development)
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
              1
        Underground
 Surface
 Mine
 Dilution
 (Sundries,
 Shortfall and
 Development)
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
              1
         Mine
 Proven
 Reserves
 Probable
 Reserves
 South AfricaBlyvoor Section .....................................................................................................
   AustralasiaTolukuma Section ..................................................................................................
    1
       the table below. These sensitivities are presented to give an indication of changes in reserves relative to the gold price assumptions used.All sensitivities have been calculated at an exchange rate of R7.32 = $1.00 for the South African Operations and K3.36 = $1.00 for PapuaNew Guinea Operations. No sensitivities are presented for Porgera as our disclosures are based on the publicly available information as atDecember 31, 2004, which did not include these sensitivities. At different gold prices, alternative mining strategies may be pursued tooptimally exploit the ore body. Due to the re-processing nature of our surface operations, those reserves are not sensitive to the price ofgold and are included in our reserve statement provided that the gold price per ounce exceeds the per ounce cost of processing thematerials.
  is material difference to the Ore Reserves as stated below. These sensitivities are presented to give an indication of changes relative togold price. These are not supported by life of mine plans and should therefore only be considered as indicative and comparable on arelative basis. At different gold prices, alternative mining strategies may be pursued to exploit the ore body optimally. The miningprocess is dynamic and will thus have a “knock-on-effect” on the operating costs and pay limit grade associated with the change inscale of operations. The inclusion of large tonnages of surface material will also influence the Ore Reserve sensitivity.
 1
 This is based on information disclosed by Placer Dome Inc. (which has a 75% interest in the Porgera Joint Venture) in its annual report for the fiscal
 year ended December 31, 2004, as filed with the SEC on Form 40-F on March 3, 2005.


32
 $300/oz
 $340/oz
 $381/oz
 $420/oz
 $440/oz
 Operation
 Tonnes Grade
 Gold
 Gold
 Tonnes
 Grade
 Gold
 Gold
 Tonnes
 Grade
 Gold
 Gold
 Tonnes Grade
 Gold
 Gold
 Tonnes Grade
 Gold
 Gold
 Mt
 g/t
 '000 ozs
 Tonnes
 Mt
 g/t
 '000 ozs
 Tonnes
 Mt
 g/t
 '000 ozs
 Tonnes
 Mt
 g/t
 '000 ozs
 Tonnes
 Mt
 g/t
 '000 ozs
 Tonnes
 Blyvoor SectionProven
  ..................28.290
                                         Total.....................30.095
 2.34
 2.266
 70.467
 34.241
 2.87
 3.159
 98.262
 39.096
 3.18
 3.998
 124.344
 44.724
 3.38
 4.857
 151.080
 47.045
 3.43
 5.184
 161.235
 $320/oz
 $360/oz
 $400/oz
 $440/oz
 $480/oz
 Operation
 Tonne
 s
 Grade
 Gold
 Gold
 Tonnes
 Grade
 Gold
 Gold
 Tonnes
 Grade
 Gold
 Gold
 Tonne
 s
 Grade
 Gold
 Gold
 Tonne
 s
 Grade
 Gold
 Gold
 Mt
 g/t
 '000 ozs
 Tonnes
 Mt
 g/t
 '000 ozs
 Tonnes
 Mt
 g/t
 '000 ozs
 Tonnes
 Mt
 g/t
 '000 ozs
 Tonnes
 Mt
 g/t
 '000 ozs
 Tonnes
 Tolukuma SectionProven
  ....................
                                          Total


33
 Governmental regulations and its effect on our business
 South Africa
 Common Law Mineral Rights and Statutory Mining Rights
  Africa could be acquired through the common law or by statute. Under the old regime, the term freehold title refers to a right ofownership of land and the surface thereof and the term “mining title” refers to a right of ownership of the minerals below the surface orthe right to mine such minerals. With effect from May 1, 2004, all minerals have been placed under the custodianship of the SouthAfrican government under the provisions of the MPRD Act, and old order proprietary rights need to be converted to new order rights ofuse within certain prescribed periods, as dealt with more fully below.
 Old Order Rights - Mining Authorizations
  person or mining entity may prospect or mine for minerals without being granted a prospecting or mining authorization. Prior to grantinga prospecting or mining authorization, two requirements had to be fulfilled. First, the mining entity must either be the registered holder ofthe mineral rights or have obtained the written consent of the registered holder of the mineral rights to mine the minerals concerned for itsown account. Second, the Department of Minerals and Energy, or the DME, must be satisfied with the scale, manner and duration of theintended prospecting or mining operations and must approve an Environmental Management Program, or EMP. A prospecting permitwas issued for a limited period but could be renewed on application. A mining license was generally issued until such time that theminerals could no longer be mined in an economically viable manner. The rights enjoyed under these authorities will endure until they areconverted 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
    These include the submission of a mining plan, demonstrable technical and financial capability to give effect to the plan, provision forenvironmental management and rehabilitation, and compliance with certain black empowerment and social-economic guidelines. Theseapplications need to be submitted within five years after the enactment of the MPRD Act on May 1, 2004. Similar procedures applywhere we hold prospecting rights and a prospecting permit and conduct prospecting operations. Where we hold unused rights however,the application for conversion to mining or prospecting rights had to be submitted within one year. The requirements for unused rights aremore stringent than for used rights, particularly insofar as participation in benefits from historically disadvantaged groups are concerned.The DME has, in these instances also a wider discretion to refuse an application for conversion. Under the new MRPD Act, mining rightsare not perpetual, but endure for a maximum of thirty years, after which they may be renewed for a further thirty years. Prospecting rightsare limited to five years, with one renewal of up to three years. All relevant applications have been submitted.
  may attach specific conditions and limitations to the exercise of new order rights. It may, for example, reduce the area over which the neworder right applies, if it is of the view that the prospecting or mining work programs submitted by an applicant do not justify the extent ofthe area covered by the old order right. They may also be suspended or cancelled by the Minister of Minerals and Energy in the event ofa breach or, in the case of mining rights, of non-optimal mining in accordance with the mining works program.
  The South African gold mining industry is taxed under the gold tax formula which recognizes the high level of capital expenditurerequired to sustain a mining operation over the life of mine. This results in an additional tax benefit, not afforded to other commercialcompanies. In addition, the South African Government has indicated that it is looking at a revenue based royalty for mining companies, asoutlined in the draft Mineral and Petroleum Royalty Bill, 2003, or Royalty Bill, which was released in March 2003 for comment. TheRoyalty Bill proposed a three percent royalty on gross revenue for gold mining companies. In conjunction with the South African MiningDevelopment Association we have made submissions to the government outlining our concerns about a revenue based royalty andrecommended a profit based royalty be introduced instead. In his budget speech in February 2004, the South African Finance Ministeracknowledged that the draft Royalty Bill may need some refinement, but also stated that government’s preference is for a revenue basedroyalty, with introduction of the revenue based royalty as of 2009. As at October 31, 2005, these issues were still under review. Theintroduction of the proposed revenue based royalty would have an adverse effect on the profitability of our South African Operations. Weare currently evaluating the impact of the proposed revenue based royalty.


34
  Empowerment Charter, or Mining Charter, to be developed by the Minister within five years of commencement of the Act, beginningMay 1, 2004. The mining industry has submitted its proposals on the content of the Mining Charter. In its current format its objectivesinclude:
      expansion of the skills base of such persons, the promotion of employment and advancement of the social and economic welfareof mining communities; and
    Africans of South African mining assets. It recommends that these are achieved by, among other methods, the sale of assets by miningcompanies to historically disadvantaged persons on a willing seller, willing buyer basis at fair market value. The goals set by the MiningCharter require each mining company to achieve 15 percent ownership by historically disadvantaged South Africans of its South Africanmining assets within five years and 26 percent ownership within ten years from May 1, 2004. It also sets out guidelines and goals inrespect of employment equity at management level with a view to achieving 40 percent participation by historically disadvantagedpersons in management and ten percent participation by women in the mining industry, each within five years. Compliance with theseobjectives is measured on the weighted average “scorecard” approach in accordance with a draft scorecard which was published by thegovernment in February 2003.
  parameters of the MPRD Act. We have demonstrated our commitment through our 40% owned associate company, CGR, through whichwe facilitated the acquisition of 60% of our interest in CGR by KBH in fiscal 2004. We also plan to enter into a new transaction in fiscal2006 to provide sustainability to our black empowerment partnership with KBH (See Item 4A: “History and Development of theCompany”). However, it is still too soon for us to be able to set out a definitive timeline of when we will comply with our objectivesbefore the expiration of the 10 year time limit, as the legislation was only passed in 2004. The provisions of the Mining Charter apply toeach mining company individually. It is not possible for us to meet our obligations under the Mining Charter solely by disposing of ourless profitable operations which would undermine the objectives of the Mining Charter. In order to comply with the Mining Charter,empowerment transactions must be at fair market value, we do not anticipate incurring any loss in fulfilling our obligations provided thatwe 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 thisend, imposes various duties on us at our mines, and grants the authorities broad powers to, among other things, close unsafe mines andorder corrective action relating to health and safety matters. In the event of any future accidents at any of our mines, regulatory authoritiescould take steps which could increase our costs or reduce our production capacity.
  employers are required to contribute to a fund specifically created for the purpose of compensating employees or their dependants fordisability or death arising in the course of their work. Employees who are incapacitated in the course of their work have no claim forcompensation directly from the employer and must claim compensation from the COID Act fund. Employees are entitled tocompensation without having to prove that the injury or disease was caused by negligence on the part of the employer, although ifnegligence is involved, increased compensation may be payable by this fund. The COID Act relieves employers from the prospect ofcostly damages, but does not relieve employers from liability for negligent acts caused to third parties outside the scope of employment.We have contributed approximately $5.6 million over the past three fiscal years under the COID Act, to a multi-employer industry fundadministered by Rand Mutual Assurance Limited.
  employer fund pays compensation to employees of mines performing “risk work,” as defined by the Minister for Health, usually incircumstances where the employee is exposed to dust, gases, vapors, chemical substances or other working conditions which arepotentially harmful, if the employee contracts a “compensatable disease,” which includes pneumoconiosis, tuberculosis, or a permanentobstruction of the airways. No employee is entitled to benefits under the Occupational Diseases Act for any disease for whichcompensation has been received or is still to be received under the COID Act. We are currently in compliance with these paymentrequirements, which are based on a combination of the employee costs and claims made during the year.


35
  potential risks for radiation exposure of workers at those operations and the public in the nearby vicinity. We monitor our uranium andradon emissions and believe that we are currently in compliance with all local laws and regulations pertaining to uranium and radonmanagement and that we are within the current legislative exposure limits prescribed for workers and the public, under the NuclearEnergy 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 ofspecific areas of environment impact, as in the case of the Atmospheric Pollution Act (dust pollution), the National Water Act (managingeffluent), the Environmental Conservation Act (waste disposal) and the Nuclear Energy Act (latent radon contamination). Liability forenvironmental damage is also extended beyond the corporate veil to impose personal liability on managers and directors of miningcorporations 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 theenvironment.
  conducted and all potentially affected parties have been given an opportunity to comment on the proposed mining. Mining companies arealso required to demonstrate both the technical and financial ability to sustain an ongoing environmental management program, andachieve ultimate rehabilitation, the particulars of which are to be incorporated in an environmental management program, or EMP. Thisprogram is required to be submitted and approved by the DME as a prerequisite for the issue of a new order mining license. Financialprovision is made by depositing funds into a rehabilitation trust fund. We have a registered fund for each of the Blyvoor, Durban Deepand West Wits Sections and our associate, CGR, has registered funds for the Crown and ERPM Sections. These funds are discussedbelow.
    environmental risks vary from site to site. These risks have been addressed in EMPs which have been submitted to the DWAF and arereviewed and updated on an annual basis. As of June 30, 2005, EMPs have been submitted for all operations in South Africa and all havebeen approved by the DWAF. Additionally, the key environmental issues have been prioritized and are being addressed through activemanagement input and support and progress measured in terms of activity schedules and timescales determined for each activity. Twoenvironmental compliance assessments have been conducted at the Blyvoor Section and the Crown Section, which both show that thesemines are in substantial compliance with the conditions of their EMPs.
   Financial Provision for Rehabilitation
  once the mining operations cease. In South Africa we have funded these environmental rehabilitation costs by making contributions overthe life of the mine to environmental trust funds established for each operation. Funds are irrevocably contributed to trusts that functionunder the authority of trustees that have been appointed by, and who owe a statutory duty of trust, to the Master of the High Court ofSouth Africa. The funds held in these trusts are invested primarily in interest bearing debt securities and equity-limited unit trusts. As ofJune 30, 2005, we held a total of $6.4 million in trust, the balance held in each fund being $1.8 million (2004: $1.8 million) for West WitsSection, $2.5 million (2004: $2.5 million) for Blyvoor Section and $2.1 million (2004: $2.1 million) for the Durban Deep Section. Trusteemeetings are held as required, and quarterly reports on the financial status of the funds, are submitted to our board of directors.
  address shortfalls in the funds by accruing trust investment income for the benefit of the funds and by replenishing it with the proceedsfrom the sale of redundant mining equipment at the end of the life of the mine. If any of the operations are prematurely closed, therehabilitation funds may be insufficient to meet all the rehabilitation obligations of those operations.


36
  MPRD Act assumes a fully compliant fund at any given time in the production life of a mine. The DME has indicated that the traditionalring fencing of funds may, for investment purposes, be relaxed and that insurance instruments may also be received subject to the DME’sconsent, to make up the shortfall in available cash funds.
  down from $39.1 million on June 30, 2004. The decrease is attributable to the exclusion of Buffelsfontein Gold Mine Limited (whichowns the North West Operations that was placed under provisional liquidation on March 22, 2005).
 Papua New Guinea
         initial term of this lease was for a period of 8 years, which was renewed for a further 10 years, expiring 2012. The mining lease may berenewed for further periods not exceeding 10 years in accordance with applicable laws. Current exploration activities are covered by anumber of exploration licenses. These licenses have been granted for a term not to exceed two years but can be renewed for further twoyear periods. In total, there are 11 exploration licenses or applications covering the Tolukuma Section.
  Porgera Mining Development Contract, or the Porgera Contract, between the Government of Papua New Guinea and the members of thePorgera Joint Venture. The Porgera Contract specifies, among other matters, the annual rents that must be paid for the Special MiningLease 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 theproject infrastructure is located. There is no expiration date for the Porgera Contract, but it is tied to the continuation of the SpecialMining Lease. Leases for mining purposes have also been awarded by the Government of Papua New Guinea for land use associated withthe mining operation such as waste dumps, campsite, and an airstrip. Permits are held for water use, including run-off fromunconsolidated surfaces, such as the open pit, the underground mine and the waste dumps. These permits are renewable on a regular basisand are subject to public hearing before approval.
  Safety Act and Regulations as applied by the Papua New Guinea Government. We believe all requisite licenses and permits are in goodstanding.
 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 includesrequirements pertaining to worker training, risk assessment and safe working procedures with regard to all activities associated withmining.
 Environmental Regulations in Papua New Guinea
  2004. The Environmental Act and Regulations provide for objective criteria for regulating the impact of activities on the environment, aswell as the regulation of air and water pollution. Both the Tolukuma and Porgera Sections have a number of licenses and permits withwhich those respective operations are required to comply.
  activities because of the size and complexity of their processes. Level 3 activities are subject to more rigorous regulation as they areregarded as being more likely to create an adverse impact on the environment. Pursuant to the grandfathering provisions of theEnvironmental Act and Regulations, both the Tolukuma and Porgera Sections are able to continue to operate under their existingenvironmental plans and permits.


37
  and 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 are:
             “Property, Plant and Equipment – Description of Significant Subsidiaries, Properties and Mining Operations” under “Environmental andClosure Aspects.”
 Fiji
 Environmental Regulation in Fiji
     the Director of Mines grants mining permits and leases under the Fijian Mining Act and has the power to attach conditions tothose permits or leases. Under certain provisions of the Fijian Mining Act, the Director of Mines has power to cancel a leaseor 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 landonce mining operations cease. There is also a requirement under the Fijian Mining Act to pay compensation to land ownersfor any damage to the surface of land caused by the mining operations; and
  pollution of a watercourse is an offense under the Fijian Mining Act, although permits can be obtained to authorize thedeposit of sludge and tailings. The Fijian Mining Act requires all areas of subsidence to be clearly marked and fenced offwith warning signs posted. Failure to comply with these provisions is again an offense. The Fijian Mining Act also containsprovisions regulating the storage and protection of chemicals and poisons and accompanying washes and antidotes, dustabatement requirements and the construction of dams.
        the existing mining and environmental protection legislation are relatively small compared to international standards.However, theFijian Parliament is currently considering an Environment Management Bill introduced on July 28, 2004 which was ready forenactment on March 17, 2005. When passed, this bill will introduce a number of environment protection measures, many of whichwill impact the mining industry. The Bill contains provisions imposing liability upon directors for offenses committed by a company.


38
 4C. ORGANIZATIONAL STRUCTURE
 The following chart shows our percentage of ownership and voting rights in our principal subsidiaries, associate, joint venture
 and investments as of June 30, 2005. All of our subsidiaries are incorporated in South Africa unless otherwise indicated. We hold themajority 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%
 100%
 100%
 100%
 100%
 100%
 100%
 40%
 100%
 Australasian Operations
 100%
 45.33%
  100%
 20%
 100%
         Blyvooruitzicht Gold Mining
 Company Limited
 Buffelsfontein Gold Mines
 Limited
  Durban Deep Section
  DRDGOLD Limited
 West Witswatersrand Gold
 Holdings Limited
 Crown Consolidated Gold
 Recoveries Limited
 Buffels Section
 Harties Section
 Duff Scott Hospital (Pty)
 Limited
 West Witwatersrand Gold
 Mines Limited
  Crown Gold Recoveries
 (Pty) Limited
 East Rand Proprietary
 Mines Limited
 Blyvoor Section
 North West Operations
 West Wits Section
 Crown Section
 ERPM Section
 Porgera Section
 Tolukuma Section
 Tolukuma Gold Mines Ltd
 (Papua New Guinea)
 DRD (Isle of Man) Limited
 (Isle of Man)
 Emperor Mines Limited
 (Australia)
 DRD (Porgera) Limited
 (Papua New Guinea)
 Vatukoula Mine (Fiji)
 Porgera Joint Venture
 (Papua New Guinea)


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


Tolukuma and Porgera
 Vatukoula Gold Mine


41
 Description of Significant Subsidiaries, Properties and Mining Operations
 South Africa
 West Witwatersrand Basin Geology
  Witwatersrand Basin, exploiting gold bearing reefs in addition to certain surface sources. The Crown Section and the ERPM Section arealso located within the Witwatersrand Basin. The Crown Section exploits various surface sources, including sand and slime tailingsdeposited as part of historical mining operations. The ERPM Section is predominantly an underground mining operation with a surfaceoperation for the processing of sand from the Cason Dump. Our underground operations are typical of the many gold mining operationsin 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 WitwatersrandBasin 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, theEast Rand Goldfield, the West Rand Goldfield, the Far West Rand Goldfield, the Central Rand Goldfield, the Klerksdorp Goldfield andthe Free State Goldfield. As a result of faulting and other primary controls of mineralization, the goldfields are not continuous and arecharacterized by the presence or dominance of different reef units. The reefs are generally less than 6 feet (2 meters) thick but in certaininstances, these deposits form stacked elastic wedges which are hundreds of feet thick.
  Blyvooruitzicht Mine
 Overview
  Mining Company Limited. The consolidated mining operation, referred to as the Blyvoor Section, consists of the adjacent mines ofBlyvooruitzicht and Doornfontein which are located within the Far West Rand Goldfields on the northwestern edge of the WitwatersrandBasin. Blyvoor was the first mine in the “West Wits” line. Together, these two operations have produced over 35 million ounces of goldsince inception. The net book value of the mining assets at the Blyvoor Section is $46.1 million at June 30, 2005, with 4.0 million ouncesof Ore Reserves.
  profitability. The 60-day review was extended to September 13, 2004. By October 5, 2004, 1,619 employees had been retrenched at a costof $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 forreasons related to restructuring of the operations.
   total capital cost of $12.0 million (R80.5 million). In total, the No. 2 Sub-Shaft Project, is expected to yield some 770,491 0z of goldfrom 2.4 million tons of ore with an average delivered grade of 8.18 g/t, restoring Blyvoor’s life to 17 years. This project has beendesigned in three phases. Phase 1 will include the opening up of and the gaining of access to the No. 2 Sub-shaft to a certain level.Stoping operations will also commence then. The estimated completion deadline for Phase 1 is April 2006. Phase 2 includes thecommissioning of the winders and the re-equipping of the No. 2 Sub-shaft where we will also attempt to gain access to stoping areasbelow the level established during Phase 1. The estimated completion date for Phase 2 is December 2006. Phase 3 will commence inSeptember 2006 and will be completed by September 2009. This phase will involve the opening up of all other levels for the shaft andmining will begin by level as each level is opened up.


42
  for completion by the end of December 2005. This expansion involves the installation of an additional pump and wider gauge pipes inorder to ease congestion and further improve plant efficiency, together with the implementation of a number of in-plant process upgradesto ease maintenance demands. We estimate that this expansion will result in a 24% increase in volume, a 12% increase in goldproduction, and a slight reduction in operating costs. The capital cost of the expansion was minimized by acquiring pipes, pumps andvalves second-hand from AngloGold Ashanti’s Ergo surface reclamation operation which closed earlier in the year.
 Property
  Witwatersrand Basin, near the town of Carletonville, Gauteng Province, about 50.0 miles (80.5 kilometers) south-west of Johannesburgand 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.
  administrative offices for the managerial, administrative, financial and technical disciplines, workshops and consumable stores, themetallurgical plants, tailings dams and waste rock dumps. Blyvoor also houses the majority of its employees in Blyvoor-owned houses onthe 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 (2,079hectares) of freehold property.
   History
 1937
 Blyvooruitzicht Gold Mining Company Limited, or Blyvoor, was incorporated and registered as a public company in SouthAfrica on June 10, 1937.
 1942
  1995
  1996
  1997
  2001
  2003
  2004
 On June 28, 2004, we entered into a 60-day review period on the Blyvoor Section. The 60-day review was extended toSeptember 13, 2004. By October 5, 2004 1,619 employees had been retrenched at a cost of approximately $3.1 million, withpossible future restructuring initiatives depending on the economic circumstances.
 2005
 In August 2005, our Board of Directors approved No. 2 Sub-Shaft Project and the Slimes Dam Project to establish miningoperations 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 KBH of a 15% stake inour South African Operations.On October 27, 2005, our board of directors approved the transaction with KBH. The new structure results in KBH acquiring a15% interest in a newly created vehicle, DRDGOLD South African Operations (Pty) Limited, or DRDGOLD SA, whichincludes ERPM, CGR and Blyvoor. We will retain an 85% interest.
 Geology and Mineralization
  is one of the principal ore bodies in the goldfield, and the Middelvlei Reef horizons which occur in discrete channels over parts of thelease area approximately 246 feet (75.0 meters) vertically above the Carbon Leader Reef horizon. The Carbon Leader Reef is theprincipal economic horizon across the lease area and is a planar single sheet conglomerate. The Carbon Leader Reef typicallycomprises basal carbon seam, overlain by a thin, small pebble conglomerate, enriched in carbon in the lower portion. The grade of theCarbon Leader Reef is more variable than the Middelvlei Reef. The Middelvlei Reef consists of a variable number of polymicticquartz conglomerate bands, interbedded with coarse grain quartzite. The grade of the Middelvlei Reef is more erratic than the CarbonLeader Reef, with distinctive payshoots forming as southward-orientated linear zones.


43
  where continued existence of mining operations was dependent upon the mining of scattered Carbon Leader Reef remnants and limitedsections of the lower grade Middelvlei Reef.
 Mining and processing
  situated at the Blyvoor and Doornfontein mines. Doornfontein was previously a separate mine adjacent to the Blyvoor mine but has sincebeen merged to form the Blyvoor Section. The shaft system consists of four vertical shafts from the surface, thirteen sub-incline shaftsand two sub-vertical shafts underground. Of these thirteen incline shafts, only nine are in operation and are used for the conveyance ofpersonnel, 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 andhoisted up via the Blyvoor No. 5 Shaft, from where, it is trucked to the gold plant. The average mining depth at the Blyvoor Section is10,541 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 surfaceand transported to the metallurgical plant for gold extraction.
  based on a conventional flowsheet comprising multi-stage crushing, open circuit primary and closed circuit secondary milling withhydrocyclones, thickening and cyanide leaching in a Carbon-in-Pulp, or CIP, carousel arrangement. The gold is recovered throughelectrowinning followed by smelting to doré. The circuit was recently modified by the closure of the filtration system and thecommissioning of a modern carbon Kemix pumpcell plant.
  from the Industrial Development Corporation, or IDC, loan granted to Blyvoor, for this purpose. This project was to facilitate thecommissioning of additional infrastructure and the opening up of additional mining areas to further enable the effective mining ofreserves at the Blyvoor Section.
  135,000 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 theplanned 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 4 Slimes Dam and the recovery grades were below expectation. From August 2004, theprocessing of material from the 5 Slimes Dam commenced and the recovery grade improved. With the conclusion of the 60-day reviewentered into on June 28, 2004, certain shafts were placed on a “care and maintenance” program, resulting in a decrease to a total of sevenvertical and decline shafts.
  higher grade Carbon Leader Reef at No. 5 Shaft. Accelerated development, however, has ensured that the mine is well positioned torestore Main Reef mining to appropriate levels at No. 5 and No. 6 Shafts in response to gold price fluctuations.
  Africa. Eskom operates a national power supply grid consisting of 24 power stations across the country. Electricity to the Blyvoor Sectionis provided from the Wes Wits substation outside Carletonville at 44,000 volts. Further substations, located on mine site, transform thepower 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 525volts for smaller devices and equipment used on the mine. The average annual power consumption is about 432 GWHr and the maximumdemand is about 66 MW.
  extension of Slimes Dams 4, 5 and 6 ($7.6 million), underground expansion projects ($2.5 million) and a water project ($0.4 million). Inaddition, approximately $0.4 million was spent on the installation of a Knelsen concentrator and Acacia reactor and $0.3 million on anOverland conveyor.


44
 Exploration and Development
  slimes dam material from the 4 and 5 Slimes Dam Project. The project was commissioned during November 2003 and completed at a costof $6.9 million including the conversion of leaching tanks, linear screens, pipes and site construction. The No. 6 Slimes Dam has beenextended to provide additional capacity for the tailings from this project at a cost of $0.7 million. The project involves the reclamation ofapproximately 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 goldproduced. The project costs were funded from the R65.0 million ($10.4 million) loan facility from the IDC.
 Environmental and closure aspects
  sinkholes and subsidences, exposes the Blyvoor Section to relatively unique environmental risks and costs associated with theremediation 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 theoperations is discharged into the Wonderfonteinspruit and the Doorndraai Dam. In order to address the risk of contamination of groundwater, streams and wetlands, water is sampled and the level of contaminants monitored in accordance with Blyvoor’s water managementplan. Fissure water at Blyvoor is generally of a good quality, therefore we believe that the contribution of this water to pollution of waterin the area is minimal.
  Section. This is because the impact of our discharge cannot be addressed without addressing the impact from the discharge of otherneighboring mining operations. The Far West Rand Dolomitic Water Association, of which all mining operations in the area aremembers, has undertaken two studies. Apportioned responsibility has been recognized by the DWAF and they have initiated an impactassessment on the Wonderfonteinspruit in order to assess the cumulative impact from the different mining operations. The first study,commissioned and completed in January 2003, addressed the methodologies proposed for filling in sinkholes and subsidences. Thesecond study will address the impact of the flooding on the dolomitic aquifers when mining in the area ceases. This study has beencommissioned and is scheduled to be completed by the end of calendar 2005.
  collapse in the rock structure. Dolomitic rock could be dissolved, resulting in an increased risk of sinkholes and possible pollution of freshwater resources stored in the dolomitic formations. The seepage may also cause pollution of fresh water resources stored in dolomiticformations, which if pumped to surface will result in pollution on the surface. The occurrence of sinkholes is limited to a particular area ofthe Blyvoor Section, which requires an active program in the water management plan to continuously divert ground water away from theaffected area and reduce the risk of seepage into the dolomitic structure. Should the pumping apparatus fail and there is an excessive buildup of surface water, this could over a period of time result in a weakening of the underlying dolomitic structure and the occurrence of asinkhole in that area. In addition to purifying the water for our own use, we repair all sinkholes that form on our property, in accordancewith industry and government standards. Sinkholes which form outside of our property are repaired by the Far West Rand DolomiticWater Association.
  accomplished through ridge ploughing the top surface of dormant tailings dams. Environmentally friendly dust suppressants, such asmolasses, are also applied when deemed necessary. In the long-term, dust suppression and water pollution is managed through a programof progressive vegetation of the tailings complexes followed by the application of lime, to neutralize the natural acidic conditions, andfertilizer as the organic growth medium.
  were made by the relevant regulator. The environmental management program identified the impacts associated with the reclamationof the dams and the extension of the No. 6 return water dam and identified remedial measures to minimize the risk. The DWAF visitedthe site in August 2004 and was satisfied with our environmental performance.
  for the Blyvoor Section, in current monetary terms as at June 30, 2005, is $8.2 million. This has been included in the provision forenvironmental rehabilitation, restoration and closure costs on our balance sheet. A total of $2.5 million has been contributed to aRehabilitation Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointedas trustees by the Master of the High Court of South Africa.


45
 Life of Mine
  Ore Reserves of the Blyvoor Section were 4.0 million ounces. In fiscal 2004, based upon a gold price of approximately R90,023 perkilogram at June 30, 2004, the Proven and Probable Ore Reserves of the Blyvoor Section were 4.3 million ounces. The decrease of 0.3million ounces is due to mining depletion and an increase in working costs. The increase in the working costs resulted in a largerpercentage of marginal ore being included in the Life of Mine Plan and hence Ore Reserve Statement. A Mineral Resource competentperson is appointed at each operation to review our Ore Reserve calculations for accuracy. For Blyvoor, David Edwin James Whittaker(SACNASP) is the appointed Mineral Resource competent person.
   Current year production
  and 23,920 ounces from surface areas. This represents 37% of our production from continuing operations of 433,586 ounces based on oursubsidiaries and our attributable 20% interest in Porgera. In fiscal 2004, a total of 233,094 ounces of gold were produced compared to247,626 ounces in fiscal 2003.
  were closed but non-contributing business units such as No. 4 Shaft were placed on care and maintenance. Additionally, mining of thelower grade Main Reef at No. 6 shaft was cut by 50% in favor of increased mining of the higher grade Carbon Leader Reef at No. 5 Shaft.Surface gold production decreased from 34,883 ounces in fiscal 2004 to 23,920 ounces in fiscal 2005 due to the depletion of the surfacerock dump material.
  Rand gold price, price increases in key consumables, operational difficulties, increased lock-up in the plant due to the ending of surfacerock dump feed to the mill and poor initial recoveries from the Slimes Dam Project. As a result of operational difficulties, we alsoannounced 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 totalemployee costed. Cash costs of $456 per ounce in fiscal 2005 increased from $388 per ounce in fiscal 2004. Total costs for fiscal 2005 of$498 per ounce in the current year also shows an increase compared to $427 per ounce in fiscal 2004. While the cash operating target of$400 per ounce remained elusive, it moved within striking distance during the second half of fiscal 2005 at $407 per ounce. Thiscompares with $498 per ounce in the first half. A Knelsen concentrator and Acacia reactor were installed at a cost of $0.4 million (R2.5million) in order to prevent lock-ups, improve recoveries by lowering residue grades and reducing costs. While the full benefits have yetto be realized, performance during commissioning has been very promising.


46
  at June 30, 2003 to R6.28 = $1.00 at June 30, 2004. Total costs per ounce of gold produced increased to $427 per ounce in fiscal 2004from $110 per ounce in fiscal 2003 primarily attributable to operational difficulties and a decrease in the recovered grade.The following table details the operating and production results from the Blyvoor Section for the past three fiscal years.
 Year ended June 30,
 2005
 2004
 2003
 Production- Surface Operations
                              Results of Operations ($)Revenues ('000) .............................................................................................................................
        Non-US GAAP Financial DataCash cost per ounce of gold ($)
 1
      1
     1
 Cash cost per ounce and total cost per ounce are non-US GAAP financial measures 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: “OperatingResults.”


47
 Crown Gold Recoveries (Pty) Limited (CGR)
 Overview
  (Pty) Limited, or CGR. CCGR was incorporated in South Africa on May 23, 1997. Pursuant to a scheme of arrangement, we acquired100% of CCGR on September 14, 1998. Additionally, in October 2002, we entered into an agreement with third parties to purchase theentire issued share capital and all shareholders’ claims of East Rand Proprietary Mines Limited, or ERPM, for a purchase price of $11.0million. For a full description of the transactions associated with our acquisition of CGR, see Item 4A: “History and Development of theCompany.”
  referred to as the Crown Section. The ERPM Section consists of an underground section and the Cason Dump surface retreatmentoperation. The underground mining operation at ERPM implemented a controlled closure program and was scheduled to close inMarch 2005. Following the retrenchment of 806 employees in August 2004 at a cost of $0.6 million (R3.7 million), the mine has achieveda reduction in costs coupled with improved productivity. As a result, the original planned closure of the underground section waspostponed. The Cason Dump surface re-treatment operation will continue to operate until 2010 under the management of the CrownSection based on the current rate of production of approximately 150,000 tpm. The Crown Section undertakes the retreatment of surfacesources deposited as tailing from non-operating mining sites across central Johannesburg.
       Current year production
   Year ended June 30,
 2005
 2004
 2003
 Production
 Surface and underground operationsOre mined ('000 tons)............................................................................................................................
             compared to 96,878 ounces in fiscal 2004, and 77,239 ounces for fiscal 2003. The decrease in fiscal 2005 is due to a decrease in therecovered grade from 0.020 ounces per ton in fiscal 2004 to 0.018 ounces per ton in fiscal 2005.
    share of gold production of 44,895 ounces in fiscal 2004. ERPM’s consistent performance, in comparison to prior year, is largely due tothe Knights plant’s absorption of tonnage from ERPM’s Cason surface retreatment operation, which has run smoothly throughout thecurrent fiscal year.
 Separate consolidated financial statements and notes thereto for CGR for its fiscal years ended June 30, 2005, 2004 and 2003 are beingfiled pursuant to Rule 3-09 of Regulation S-X.


48
  Crown Section
 Property
  mining rights to 5,787 acres (2,342 hectares) and has the right to occupy 1,490 acres (603 hectares) of freehold property. CGR is in theprocess 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 XavierRoad on the M1 Johannesburg-Kimberley-Bloemfontein highway. The City Deep operation is located on the West Wits line within theCentral Goldfields of the Witwatersrand Basin, approximately 3 miles (5 kilometers) south-east of the Johannesburg central businessdistrict in the province of Gauteng. Access is via the Heidelberg Road on the M2 Johannesburg-Germiston motorway. The Knightsoperation is located at Stanley and Knights Road Germiston off the R29 Main Reef Road.
  History
 1979
 Rand Mines Limited directors approved the formation of the company Rand Mines Milling & Mining Limited (RM3) totreat the surface gold tailings created from the underground section of the original Crown Mines, which had been inoperation 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 toestablish a company that would acquire dump retreatment operations on the Witwatersrand.
 formation of CCGR, which was incorporated as a public company in South Africa in May 1997. CGR is a wholly ownedsubsidiary 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 KBH of a 15%stake in our South African Operations.
 On October 27, 2005, our board of directors approved the transaction with KBH. The new structure results in KBHacquiring a 15% interest in a newly created vehicle, DRDGOLD South African Operations (Pty) Limited, or DRDGOLDSA, which includes ERPM, CGR and Blyvoor. We will retain an 85% interest.
 Mining and processing
    surface sources have generally undergone a complex depositional history resulting in grade variations associated with improvementsin 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, the Crown Section also operated the West Wits gold plant forthe processing of sand and slime. The Crown Section also includes the ERPM plant discussed below. All of the plants have undergonevarious modifications during recent years resulting in significant changes to the processing circuits.


49
  in Africa. Eskom operates a national power supply grid consisting of 24 power stations across the country. Electricity to the CrownSection is supplied to the Crown Central and City Deep business units from separate substations referred to as Jupiter and No. 15Shaft Crown Mines, and for the Knights by the Ekhurhuleni Town Council. Electricity is supplied directly from the national powergrid to the substation and town council at 44,000 volts. Substations, located on mine sites, transform the power to 6,600 volts fordirect supply to the plants. The power supply is further reduced to 525 volts for smaller devices and equipment.
    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 highpressure 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, 2005, the overall plant utilization was 95%.
 City Deep Plant:
 secondary and tertiary cycloning in closed circuit milling, thickening, oxygen preconditioning, CIL, elution and zinc precipitationfollowed by calcining and smelting to doré. In 1998, the plant was converted to a slimes only operation. However, due to operationaldifficulties caused by the particulate nature of the slimes, the milling circuit has subsequently been recommissioned to facilitate thetreatment of sand.
 Crown Mines Plant:
 circuit including screening, primary cycloning, open circuit milling, thickening, oxygen preconditioning, CIP and CIL, elution, zincprecipitation 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
  potential gold bearing surface material owned by third parties that could be processed on a full treatment basis or purchased outright bythe Crown Section.
 Environmental and closure aspects
  residential development. The major environmental risks are associated with dust from various recovery sites, and effective managementof relocated process material on certain tailings dams. Capital expenditure of $1.5 million (R9.6 million) was spent in fiscal 2005, most ofwhich was directed to upgrading and maintenance of the CGR tailings dams. The impact of windblown dust on the surroundingenvironment and community is addressed through a scientific monitoring and evaluation process, with active input from the University ofWitwatersrand and appropriate community involvement. Environmental management programs, addressing a wide range ofenvironmental issues, have been prepared by specialist environmental consultants and applied specifically to each dust sample recoverymonitoring site and integrated into CGR’s internal environmental assessment process. Although CGR completed a project for thickeningre-processed tailings, there also remains a risk of localized sloughing which can result in that section of the tailings dam being closedtemporarily, with repair work being done to the dam wall. Water pollution is controlled by means of a comprehensive system of returnwater dams which allow for used water to be recycled for use in CGR’s metallurgical plant. Overflows of return water dams may,depending on their location, pollute surrounding streams and wetlands. CGR has an ongoing monitoring program to ensure that its waterbalances (in its reticulation system, tailings and return water dams) are maintained at levels that are sensitive to that capacity of returnwater dams.
  and organic dust suppression on recovery sites. Short-term dust control is accomplished through ridge ploughing the top surface ofdormant tailings dams. Additionally, environmentally friendly dust suppressants, such as molasses, are applied. Dust fall-out is alsomonitored. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation of the tailingsfollowed by the application of lime, to reduce the natural acidic conditions, and fertilizer to assist in the growth of vegetation planted onthe tailings dam.


50
  of the mine is in place. The surface reclamation process at the Crown Section has several environmental merits as it has removed apotential pollution source and opens up land for development. The Crown Section has conducted its environmental management programperformance assessment, which was submitted to and approved by the DME during fiscal 2005.
  Crown Section, in current monetary terms as at June 30, 2005, is approximately $15.8 million. A total of $1.0 million has beencontributed to the Crown Rehabilitation Trust Fund. This is an irrevocable trust, managed by specific responsible people who CGRnominated 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 the Crown Section was 0.3 million ounces. In fiscal 2004, based upon a gold price of approximatelyR90,023 per kilogram, our 40% share of Proven and Probable Ore Reserves of the Crown Section was also 0.3 million ounces. CGR’sMineral Resources and Ore Reserves have not changed from the previous year. A Mineral Resource competent person is appointed ateach operation to review our Ore Reserve calculations for accuracy. For CGR Surface, William John Laing (PLATO) is the appointedMineral Resource competent person. The current life-of-mine is seven years.
 ERPM Section
 Property
  Witwatersrand Basin in the town of Boksburg, 20 miles (32 kilometers) east of Johannesburg. Access is via Jet Park Road on the N12Boksburg-Benoni highway. Underground mining and recovery operations comprise relatively shallow remnant pillar mining in thecentral area and conventional longwall mining in the south-eastern area. Surface reclamation operations including the treatment ofsand 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 wasdecommissioned resulting in the retrenchment of 806 employees in August 2004. At FEV, there has been a drive on development anda 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.


51
 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, orEnderbrooke, and employing an outside contractor, the mine re-commenced mining operations in February 2000.
 2002
  2003
 Underground fire at FEV Shaft, in February 2003. There was also a loss of Hercules Shaft in June 2003 and the loss ofsecondary 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 March2005. The closure program has been postponed due to the current reduction in costs and improved productivity at themine.
 2005
  On July 6, 2005 we signed a Memorandum of Understanding with KBH regarding the acquisition by KBH of a 15%stake in our South African Operations.
 On October 27, 2005, our board of directors approved the transaction with KBH. The new structure results in KBHacquiring a 15% interest in a newly created vehicle, DRDGOLD South African Operations (Pty) Limited, or DRDGOLDSA, which includes ERPM, CGR and Blyvoor. We will retain an 85% interest.
 Mining and processing
  also two additional shafts namely the South East Vertical Shaft, or SEV Shaft, used for the transport of employees and materials and thehoisting of rock and the SWV Shaft that is used for water pumping only. The Cason Dump Project is used for the retreatment of surfacematerial mined from the defunct Cason shaft.
  African Labour Relations Act was issued on May 4, 2004, which required a review period of no less than 60 days to assess theoperational performance of the ERPM underground operations to consider options to restore the operations to profitability. A task teamcomprising 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, which wasexpected to be completed by March 2005. Following the retrenchment of 806 employees in August 2004 at a cost of $0.6 million(R3.7 million), the mine achieved a reduction in costs coupled with improved productivity. As a result, the original planned closure of theunderground section was postponed.
  in Africa. Eskom operates a national power supply grid consisting of 24 power stations across the country. Electricity to the ERPMSection is provided to the Cason Dump, SEV and FEV Shafts from the Bremmer substation, located in close proximity to the mine inBoksburg. 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 twosubstations, located on the mine site, transform the power to 6,600 volts for direct supply to the shaft winder and air compressors. Thepower supply is further reduced to 525 volts for smaller devices and equipment used on the mine. The average annual powerconsumption 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 thetransformer oil in the circuit breakers.


52
 Exploration and development
  at a later date depending on prevailing circumstances. Looking ahead, it will be necessary to extend the FEV decline from 75 to 78 levelto replace face length. There is also the prospect of extending ERPM’s Ore Reserves into the neighboring Sallies lease area andsignificantly increasing the life of the mine’s underground operations. An application has been made to the DME for a prospectinglicense.
 Environmental and closure aspects
  pumping from the underground section. On May 31, 2004, ERPM stopped continuous pumping of water from the underground sectionfor financial reasons due to the withdrawal of the pumping subsidy and the low Rand gold price making the cost of full time pumpingunaffordable, with occasional pumping to surface conducted on weekends. In December 2004 the mine received the pumping subsidyfunds and continuous pumping was reinstated. Studies on the estimates of the probable rate of rise of water have been inconsistent, withcertain theories suggesting that the underground water might reach a natural subterranean equilibrium, whilst other theories maintain thatthe water could decant or surface. A program is in place to routinely monitor the rise in water level in the various undergroundcompartments and there has been a substantial increase in the subsurface water levels. There is a need for further studies to be undertakenso as to qualify and quantify this risk more analytically.
    cost for the ERPM Section, in current monetary terms as at June 30, 2005, is $7.4 million. A total of $0.2 million has been contributed tothe ERPM Rehabilitation Trust Fund. This is an irrevocable trust, managed by specific responsible people who ERPM nominated andwho are appointed as trustees by the Master of the High Court of South Africa.
 Life of mine
  and Probable Ore Reserves of the ERPM Section was 0.4 million ounces, of which 0.2 million ounces relate to the underground sectionwhich is scheduled for closure at a later date, depending on prevailing circumstances. The remaining 0.2 million ounces relate to theCason Dump surface material which, based on the estimated rate of production, will be processed over a remaining 6 year period endingin fiscal 2010. Based upon a gold price of approximately R90,023 per kilogram, at June 30, 2004, our 40% share of Proven and ProbableOre Reserves of the ERPM Section were 0.2 million ounces. The year on year increase is mostly attributable to the continuation ofmining operations which were planned to be suspended in March 2005. A Mineral Resource competent person is appointed at eachoperation to review our Ore Reserve calculations for accuracy. For ERPM, Johan Smit (PLATO) is the appointed Mineral Resourcecompetent person. The current life-of-mine is five years.


53
 Papua New Guinea
 Porgera Mine
 Overview
  Porgera Joint Venture, which holds certain mining leases, easements and exploration licenses which form part of the Porgera gold mine,or Porgera, in the highlands of Papua New Guinea, or PNG. We purchased this interest in October 2003 for a purchase consideration of$77.1 million. Placer Dome Inc. is the owner of a 75% interest. The remaining interest of 5% is held by Mineral Resources EngaLimited, or MRE (on behalf of Enga Provincial Government and landowners in PNG). All of the various mineral tenements making upPorgera are exploited collectively by the joint venture partners.
  committee made up of representatives of the joint venture partners. Decisions regarding the assets which comprise Porgera, including anysale thereof, are made collectively by the parties through the management committee. The parties also have a right of first refusal withregard 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 shareof all ores, concentrates and refined products produced by Porgera. Each party also pays for its proportionate share of the costs associatedwith the mining activities.
    (91%) are PNG nationals. In addition, there are approximately 470 contractors of whom 440 are PNG nationals. Of the total workforceof approximately 2,340, approximately 75% are local residents, while the remainder work on a “fly-in-fly-out” basis. We understandthat Placer Dome Inc., in conjunction with other primary industry producers, is continuing to work with the PNG Government toaddress causes of civil unrest which affected production in 2002.
     Property
  meters) to 8,910 feet (2,716 meters) above mean sea level, about 82 miles (132 kilometers) west of the established town of MountHagen, 275 miles (443 kilometers) northwest of Port Moresby, and about 425 miles (684.0 kilometers) by road from the coastal portof Lae from which all materials are freighted. The road is partly paved and passes through unstable mountainous terrain with manymajor river crossings. Personnel are transported to mine site by bus, fixed wing aircraft and helicopter.
    the Porgera Mining Development Contract, or the Porgera Contract, between the Government of PNG and the joint venturers. ThePorgera Contract specifies, amongst other matters, the annual rents that must be paid for the Special Mining Lease, and the variousclasses of compensation that are payable to the landowners for the various land uses. The Special Mining Lease, which expires in2019, 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 MiningPurposes 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 alimestone quarry for the supply of lime to the process plant. Permits are held for water use, including run-off from unconsolidatedsurfaces, such as the open pit, the underground mine and the waste dumps. These water use permits are renewable on a regular basisand are subject to public hearing before approval. The Porgera Joint Venture runs an environmental monitoring program to ensurecompliance with the requirements of these permits.


54
  power transmission lines and water supply pipelines and other activities incidental to the main mining activity. Separate from themining tenements, there are two Exploration Licenses adjacent to the Porgera Mine, namely EL454 and EL858, which we assert wehave 20% ownership of as joint venture assets. Placer Dome Inc., or Placer, asserts we do not have a 20% interest in these ExplorationLicenses and that the Exploration Licenses are not joint venture property. On August 9, 2004, we placed a caveat on the title registerin order to prevent changes taking place without notification to us. The dispute between us and Placer regarding these ExplorationLicenses is the subject of ongoing discussion and the tenements are the subject of ongoing exploration expenditure.
  these businesses to conduct their lawful operations. Although there has never been an interruption to operations due to an issue of thisnature, if at any time in the future permits essential to lawful operations are not obtained or exemptions not granted, there is a risk thatPorgera may not be able to operate for a period. Future government actions cannot be predicted, but may impact the operation andregulation of the Porgera mine.
   History
 1938
  1975
 Placer (PNG) Limited, or Placer (PNG), a wholly owned subsidiary of Placer Dome Inc., became the operator and owner of atwo-third interest in an exploration venture with Mount Isa Mines Limited (now MIM Holdings Ltd.), or MIM.
 1979
 A Joint Venture Agreement was signed whereby Placer (PNG), MIM and New Guinea Goldfields Ltd. (a subsidiary ofGoldfields Limited) each held a one third interest and the Independent State of Papua New Guinea, or the State, had the rightto 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. TheState accepted its full 10% entitlement (inclusive of 5% on behalf of the Enga Provincial Government), thus diluting each ofthe other joint ventures down to 30% each. The State took its interest in the name of a corporate nominee, Mineral ResourcesPorgera Limited.
 1990
  1993
 Placer (PNG), Goldfields and Highland Gold each sold a further 5% to the State (15%). The additional 15% was taken by theState 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 theacquisition of Highlands Gold.
 1999
 The State reorganized the holding of Mineral Resources Porgera Limited by transferring a 5% direct interest in the JointVenture 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. TheState reorganized its holdings in the Joint Venture such that Oil Search Limited then held a 20% direct interest in the JointVenture through two subsidiaries.
 2003
 We acquired the shares of Oil Search Limited in Orogen Minerals (Porgera) Limited and Mineral Resources Porgera Limitedthrough the amalgamation of Mineral Resources Porgera Limited with Orogen Minerals (Porgera) Limited and DomeResources (PNG) Limited, our wholly-owned subsidiary.
 2004
  2005
 Expansion of existing exploration projects continues under the Porgera Deep Minex project.On November 16, 2005, we concluded a sale and purchase agreement with Emperor, in terms of which Emperor will acquireour wholly owned subsidiary, DRD (Isle of Man) Limited, or DRD (Isle of Man), which in turn holds our Papua New Guineaassets, comprising a 20% interest in the Porgera Joint Venture, a 100% interest in Tolukuma Gold Mines Limited and all ofour exploration tenements in Papua New Guinea.
 Geology and Mineralization
    body extends for up to 3,050 feet (930 meters) along strike. The maximum width across strike is 330 feet (100.6 meters), but the widthis commonly no more than 65 to 98 feet (20 to 30 meters). The intrusive diorite complex has many individual stocks and dykes. Therocks are competent however they tend to be brittle, and in the vicinity of the ore body, are extensively veined and brecciated. Theintrusive bodies tend to be concentrated towards the footwall of the deposit.


55
   Mining and Processing
  basis, was sourced 88% from open pit and run of mine stockpiled ore, and 12% from underground. Underground ore accounted for14% 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 milliontonnes per annum. Waste stripping requirements will reduce as the open pit mining operation approaches closure in 2006, allowing aprogressive 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 beingmined 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 at2,050 meter level. Stockpiled low grade ore will form the basis of ongoing gold production from mid 2008 until 2015. The open pitplans to deliver 5.3 million tones of ore to the mill by mid fiscal 2006, containing approximately 891,000 ounces of gold for arecovered production of 787,000 ounces of gold. On completion of the open pit operation, the mill will continue to processaccumulated lower grade ore stockpiles through to 2015, supplemented by the underground ore until 2008. Gold production from theopen 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, flotationand leaching capacity increasing the nominal throughput from 10,000 tonnes per day to 17,700 tonnes per day. Further improvementswere made in 1999 with the addition of further flotation capacity and the installation of gravity concentrators to remove free gold andto improve overall recoveries.
  Water for the grinding circuit is also extracted from Kogai Creek, which is located adjacent to the grinding circuit. The mine operatesfour 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 of13MW. The average power requirement of the mine is about 60 MW. Average annual power consumption is 518 GWHr.
   Exploration and Development
  underground mining exploitation. This zone is an eastward continuation of the North Zone, which is now in production and whichshares the same characteristics. Drilling also was carried out in the later part of 2004 on the Lower Central Zone. Both these zones arehosted within diorite bodies and surrounding altered sediments and consist of continuous or on echelon quartz roscoelite veins. Thereis still further resource potential in these zones, as they are not completely closed off. Drilling will continue to further define thesetargets as suitable for development. A small amount of open pit delineation drilling has been carried from underground in order toupgrade the geological model.
  adjacent to the current mine infrastructure. There are a total of seven known targets where at least some previous drilling has takenplace. This drilling is designed to bring these targets ounces to an indicated Mineral Resource status. There are also some targets thatare less well known and more conceptual in nature.


56
  project was part of the mine’s ongoing existing exploration projects however was newly termed Project Deep Minex because thisparticular part of the exploration process consists of a multi-disciplinary approach to determine targets and test the volume of groundbelow the known Porgera deposits. This approach involves the building of an integrated geological and geophysical model, variousgeochemistry techniques, and the use of seismics is to be investigated. Much of this will be the “mining” and integrating of existingdata. Drilling will be carried out with a prime target being the intersection of the Roamane Fault and the North Zone shear in depth.
 Life of Mine
  ounces of gold with a projected life of 10 years. Our 20% attributable share of estimated Proven and Probable Ore Reserves as atDecember 31, 2004, before Ore Reserve depletion, is 1.4 million ounces. Our attributable 20% share of the Proven and Probable OreReserves in the Porgera Joint Venture is based on the information disclosed by Placer Dome Inc. (which has a 75% interest in thePorgera Joint Venture) in its Annual Report for the fiscal year ended December 31, 2004, as filed with the SEC on Form 40-F onMarch 3, 2005. The Porgera Ore Reserves are estimated as at December 31, 2004. At June 30, 2005, our attributable MineralResources decreased by 16.7% or 0.5 million ounces, from fiscal 2004 and Ore Reserves decreased by 6.0%, or 0.1 million ouncesfrom fiscal 2004 mainly due to the open pit mining depletion. For Porgera, the reserves are reviewed for accuracy by Jacobus Du Plessis(Mining Technical Services Manager, Tolukuma Gold Mine).
 Environmental and Closure Aspects
  conditions construction of a tailings impoundment would be very difficult and the risk of an engineering failure high. Therefore the PapuaNew 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 MonitoringProgram.
  an Australian based independent research organization, to assess the mine's impact on the downstream river system and local people. Inits report CSIRO made certain recommendations to the Porgera Joint Venture that have either been implemented or are in the advancedstages of implementation. An advisory group, called the Porgera Environmental Advisory Komiti, or PEAK, was formed as a result of theCSIRO recommendations. PEAK comprises representatives from the Papua New Guinea Government, Papua New Guinea andinternational non-governmental organization groups, Placer (PNG) Limited and independent technical experts. The primary function ofPEAK is to enhance understanding and provide transparency of Porgera's environmental (physical and social) issues with externalstakeholders and to assist in reviewing its environmental performance and public accountability. In 2002, PEAK had its terms ofreference expanded to include mine closure.
  20% portion of total costs for Porgera, based on information provided by the operator, Placer (PNG) Limited, in current monetary termsas at December 31, 2004, is $8.0 million. This has been included in the provision for environmental rehabilitation, reclamation andclosure costs.
 Current Production
  at June 30, 2005 amounted to 195,394 ounces at a cash cost and total cost per ounce of $185 and $273, respectively. Placer Dome, 75%owner of the mine, predicted lower production in calendar 2005 due to a shift of operations from Stage 4 to Stage 5 of the open pit, whichhas harder ore and lower grades. Performance in the first six months of calendar 2005 has been negatively affected by the impact of heavyrains on the stability of the pit’s West Wall.
  part of the West Wall is necessary. Subject to final design and approvals, the work is expected to be completed by the end of calendar2006. No impact on the mine’s reserve position is expected.


57
   Year ended June 30,
 2005
 2004
 Production
 Surface and underground operationsOre mined ('000 tons)............................................................................................................................
         Results of Operations ($)Revenues ('000) ......................................................................................................................................
      Non-US GAAP Financial DataCash cost per ounce of gold ($)
 1
     1
    1
 Cash cost per ounce and total cost per ounce are non-US GAAP financial measures 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: “OperatingResults.”


58
 Tolukuma Gold Mine
 Overview
  owned and operated the Tolukuma gold and silver mine in PNG. During September 1999, we purchased 28,693,002 (19.93%) of Dome’sordinary 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.
  Port Moresby in Central Province, Papua New Guinea. The mine is in an area of steep mountainous terrain in the headwaters of IwuCreek, which drains into the Auga River. Elevations in the mine lease area range from 1,100m above sea level at the Auga River to1,750m above sea level at the top of Tolukuma hill.
   Property
  licenses covering an area of approximately 513,962 acres (208,000 hectares), two licenses under renewal covering 125,525 acres (50,800hectares) and four licenses under application totaling 1,073,884 acres (434,600 hectares).
  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 accessibleby road. All transport of employees, materials and equipment to and from the mine is by helicopter. As a result, approximately 24% ofthe production costs of the mine are spent on transportation and logistics, including the cost of jet fuel. The Tolukuma Section isworked 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 (3,650mm) per year. The vegetation is largely rainforest andthick vegetation associated with high rainfall and mountainous regions.
  main river in the area. There are three clans and at the head of each clan is a chief. The population around the mine is approximately2,700, with approximately 700 being landowners and the rest made up of outsiders coming into the area to seek employment. There isa Memorandum of Agreement, or MOA, between National Government, Provincial Government, the landowners and Tolukuma GoldMines Limited, or Tolukuma. The MOA is a working document which indicates the responsibilities of each party and their role in thesustainable development of the community. The MOA is reviewed every two years, with an MOA to be mutually agreed by the partiesif revised. Currently, there is an agreed on MOA in place.
  generation fund, a landowners’ association, the landowners, and to a Central Provincial Government fund for projects outside the minearea.


59
 History
 1984
  1987
  1993
  1999
  2001
  2005
 On November 16, 2005, we concluded a sale and purchase agreement with Emperor, in terms of which Emperor willacquire our wholly owned subsidiary, DRD (Isle of Man) Limited, or DRD (Isle of Man), which in turn holds our PapuaNew Guinea assets, comprising a 20% interest in the Porgera Joint Venture, a 100% interest in Tolukuma Gold MinesLimited and all of our exploration tenements in Papua New Guinea.
 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 tofive in fiscal 2004, compared to only one in fiscal 2003. An air-driven Kempe rig, commissioned in December 2003, is used for shortholes underground, currently targeting the down dip extension of the Tinabar ore body and an LMA90 drill rig, commissioned inJanuary 2004, is used for longer exploration holes, initially in the Gulbadi south area and the Milaihamba structural target. Anothermanportable 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 currentlydrilling ML104 targets.
  as the Zine, 120, Gulbadi, Tolukuma, and Tinabar veins, with the aim of delineating and defining additional mineralized materials formill feed. Drilling in fiscal 2005 continued at new structures that have been identified for drill testing including the Loch, Tofun, andBanana vein structures.
  Geology and Mineralization
  grade “bonanza” style mineralization. The primary structures extend 4.4 miles (7 kilometers) on strike with economic mineralizationusually occurring in well-defined zones on dip and along strike.
  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 astrike 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 westdirection.
  These zones include from north to south, Tolukuma, Tolimi, Tinabar and Gulbadi. The Gulbadi zone includes the Gulbadi and GulbadiX-veins. Clay zones of variable width are located in the intersections on two or more structures. Minor loops off the main veins, minorsplay veins and minor cross veins are excluded from the potential reserves, although they are mined at times. Infill diamond drilling of theZine and 120 veins is continuing and an underground diamond drilling program has commenced.
 Mining and processing
  mining and 7% from open pit mining. All open pit and underground mining is conducted using mining plant and equipment owned bythe Tolukuma Section. The average mining depth at the Tolukuma Section is 490 feet (150 meters) below surface or approximately 4,760feet (1,450 meters) above mean sea level. Access to underground workings is via decline shafts. Mining methods vary according to localground 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 June30, 2005 is capable of processing 18,000 tpm. Cyanide in the residue is neutralized in a detoxification plant prior to riverine discharge.


60
  Power is generated through a combination of diesel driven generator sets and hydro-turbine driven generator sets. Three hydro unitsare installed, capable of generating 1.8 MW of power. These units are dependant on the supply of adequate water. These generatorssupply 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 thediesel units (a total of 3.2 MW of diesel generating power is installed).
   Environmental and closure aspects
  authorities in July 1994. The Tolukuma Section is compliant with the Papua New Guinea Government’s regulatory requirements. Toensure continuing compliance with the government’s regulatory requirements, Tolukuma has implemented a broad-based EnvironmentalManagement and Monitoring Program, or EMMP. The measures we have taken to implement this program include addressing waterquality, population dietary surveys and aquatic fauna and metals-in-tissue surveys. These surveys were conducted during July andSeptember of calendar 2003. During March 2003, an environmental audit was concluded at the Tolukuma Section which found theoperations to be in substantial compliance with applicable Papua New Guinea legislation and the EMMP environmental plan. The studiesconducted in 2003 confirmed existing trends that had been established over recent years. The water quality meets legal requirements, asper the criteria set by the water license.
  systems in Papua New Guinea is an acceptable practice due to the seismic instability of the area and the dangers this poses for the stabilityof conventional tailings dams. Due to the fact that ore mined at the Tolukuma Mine, and the surrounding land in general is high inmercury, the potential does exist that levels of mercury discharged into the river system might expose us to criminal liability under PapuaNew Guinea legislation. As result of an internal study of the Tolukuma Mine in 2000, in order to ensure that mercury discharges remainwithin allowable limits, the following program is being followed:
        reduced when the ore is processed and there is strict monitoring of these metals. Cyanide is used in the gold recovery process and theTolukuma Section has a detoxification plant which reduces the levels of cyanide discharged to permissible levels. The Tolukuma Sectionhas a water permit, issued by the Papua New Guinea Government, to permit discharge into the local river system at acceptable monitoredlimits.
  the Tolukuma Mine do not generally use water from the Auga/Angabanga river system for consumption as these communities rely onwater from creeks, tributaries and strategically placed wells, many of which we have provided, and we are not aware of any adversehealth effects on communities associated with the Tolukuma Mine.
  Tolukuma Mine into the Auga/Angabanga river system is harmful to human life. In November 2002, Oxfam Community Aid Abroadreleased their “Mining Ombudsman Annual Report 2001-2002” which we believe made inaccurate and unsubstantiated references tomercury output and other findings contained in an internally prepared study on the Tolukuma Section done in 2000. This study was notconclusive on the mercury output at the Tolukuma Section and the results of this study were not scientifically tested. As discussed above,we increased our environmental management systems in response to this study.
  investigations concluded that there were was little difference between mercury concentrations in mining sediment from the TolukumaMine being dumped into the Auga/Angabanga river system and the naturally occurring sediments in the area. Although mercury isdetectable in the mining derived sediments immediately adjacent to the discharge point, these levels are immediately diluted to levelsbelow detectable limits upon meeting with the Alabule River. This area consists of steep gorges and fast, turbid currents. The result is ahigh dilution of mining sediments and, therefore, negligible impact on the lower Angabanga floodplain and oxbow lakes which arelocated downstream from the Tolukuma Mine. An additional study took place during June 2003, reinforcing earlier findings. While theultimate amount of rehabilitation costs to be incurred in the future is uncertain, we have estimated that the total cost for the TolukumaSection, in current monetary terms as at June 30, 2005, is $1.2 million. This has been included in the provision for environmentalrehabilitation, reclamation and closure costs on our balance sheet.


61
 Life of Mine
  price of K1,313 per ounce ($381 per ounce). Based on a gold price of $400 per ounce and an exchange rate of K3.22 = $1.00, at June 30,2004, the Proven and Probable Ore Reserves of the Tolukuma Section were 0.2 million ounces. The 0.02 million ounces increase isprimarily due to the focus on development at the Tolukuma mine.
  Tolukuma, Joe Sine (AusIMM) is the appointed Mineral Resource competent person. As at June 30, 2005, the Tolukuma gold mine hasbeen assessed with a two year life of mine for both its underground and surface operations.
 Current Production
  2003. The Tolukuma Section also produced 168,314 ounces of silver in fiscal 2005 compared to 180,252 ounces of silver in fiscal 2004and 157,844 ounces of silver in fiscal 2003. Cash costs increased to $331 per ounce of gold in fiscal 2005 from $231 per ounce of gold infiscal 2004, primarily due to lower grades, the higher cost of fuel and the logistics involved in keeping the mine supplied withconsumables and services. Total cost per ounce increased to $434 per ounce in fiscal 2005 from $355 per ounce in fiscal 2004 anddecreased to $355 per ounce in fiscal 2004 from $441 per ounce in fiscal 2003.
  Year ended June 30,
 2005
 2004
 2003
 Production
 Underground OperationsOre mined (`000 tons) ........................................................................................................................
            Results of Operations ($)Revenues ('000) ...................................................................................................................................
        Non US GAAP Financial DataCash cost per ounce of gold ($)
 1
      1
     1
 Cash cost per ounce and total cost per ounce are non-US GAAP financial measures 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: “OperatingResults.”


62
 Fiji
 Emperor Mines Limited
 Overview
   ounces of gold produced since operations commenced. The Emperor mine is a multi-shaft underground mine. Our 45.33% attributableshare of Emperor’s gold production for the year ended June 30, 2005 was 45,426 ounces. The Vatukoula mine is Fiji's second largestprivate employer with approximately 1,990 employees at June 30, 2005, and accounts for approximately 8.0% of Fiji's national foreignincome on that date.
  “History and Development of the Company.” Emperor’s rights offering closed on November 12, 2004, and we subscribed for ourentitlement under the rights offering. We did not participate in any shortfall to the rights offer.
  review by us of Emperor’s operations. To assist Emperor with its restructuring plan, we have agreed to provide an A$10.0 million ($7.6million) Convertible Loan Facility to Emperor as part of a re-financing package, which includes an agreement with ANZ Bank torestructure Emperor’s existing debt servicing obligations.
  Australian Stock Exchange has also granted Emperor a waiver of certain listing rules required to permit Emperor to grant such security tous on the terms incorporated in the Convertible Loan Facility. The Convertible Loan Facility, which was negotiated on behalf of Emperorby its independent directors, carries an interest rate of 9% per annum and is secured by a first ranking charge over Emperor’s 100%interest in the Tuvatu Gold Prospect in Fiji.
  in the Tuvatu Gold Prospect, or by December 31, 2007. Emperor has previously announced a conditional sale agreement in relation to theTuvatu Gold Prospect and expects to receive consideration of approximately A$10.0 million ($7.6 million) on completion of thattransaction.
  equal to the lower of A$0.30 ($0.23) per Emperor share or the 45 day volume weighted average price of Emperor shares on the AustralianStock Exchange prior to the date of conversion.
      our wholly owned subsidiary, DRD (Isle of Man) Limited, or 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 Gold Mines Limited and all of our explorationtenements in Papua New Guinea. Currently we, through DRD (Isle of Man), hold a 45.33% interest in Emperor.
  transaction and the issue of the new Emperor shares, we will hold approximately 90.5% of Emperor and Emperor will become oursubsidiary.


63
 Property
  Fiji. Gold mineralization is associated with a volcanic caldera, and occurs in both flat-lying and steeply-dipping structures, typicallyless than a meter in width, principally on the western fringe of the caldera. The mine can be accessed via the highway from Nadi to theVatukoula Mine. Mining is conducted underground from four main shafts exploiting the ore bodies in the southwest portion of thevolcanic margin to the Tavua Caldera, a large shield volcano about 9 miles (15 kilometers) in diameter and the recently accessed R1ore 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 appointedour Executive Chairman, Mark Wellesley-Wood as Managing Director and our Divisional Director: Australasia, RichardJohnson 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. Anoperational and support agreement was also signed pursuant to which we will provide Emperor with management andtechnical services.On November 16, 2005, we concluded a sale and purchase agreement with Emperor, in terms of which Emperor willacquire our wholly owned subsidiary, DRD (Isle of Man) Limited, or DRD (Isle of Man), which in turn holds our PapuaNew Guinea assets, comprising a 20% interest in the Porgera Joint Venture, a 100% interest in Tolukuma Gold MinesLimited and all of our exploration tenements in Papua New Guinea.
 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 liealong the margin of Tavua volcanic caldera and consist of various types of quartz-adularia-telluride-auriferous-pyrite fillings deposited infractured, faulted and shattered volcanic rocks.
    geological event and mineralized fractures persist throughout the very late stage sediments that filled in the central part of the caldera. Thegold 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, suchas sub-level stoping and caving, cut-and-fill, shrinkage stoping and up-dip mining, are also practiced. The remnants of 50 years of roomand pillar mining are also currently being successfully exploited.
    Morgardshammer mill. There are also two flotation circuits, one for slimes washed from the ore, and a conventional sulphide circuit forthe grinding circuit product. Both circuits are combined in a thickener and roasted before passing through a CIP circuit. Loaded carbon isstripped and the gold-rich solution is combined with the calcine rich solution for zinc precipitation before being smelt into bars. As atJune 30, 2005, the plant utilizes approximately 75% of its capacity.


64
 Exploration and development
    2
    2
    2
   1411. Emperor has also submitted applications for Special Prospecting License CX626 situated south of and adjacent to SPL 1411 on theisland of Vanua Levu.
 Environmental and closure aspects
  board’s policy is to work with Government environmental protection agencies to ensure compliance with all relevant regulations. Inaddition, the Emperor Section undertakes environmental projects which it considers appropriate.
  required to provide monthly updates on performance to the Managing Director who brings, and allows, operational managers to bring,major issues to the attention of the Emperor board of directors. We are not aware of any environmental issues in the Emperor Section thatcould have a material adverse impact on the Group’s business.
 Life of Mine
  our 45.33% share of the Proven and Probable Ore Reserves of the Emperor Section has increased by 40.6% or 0.1 million ounces, mainlydue to the additional 25.5% interest acquired in July 2004. Emperor’s current life-of-mine plan is based on a projected life of 5 years. AMineral Resource competent person is appointed at each operation to review our Ore Reserves calculations for accuracy. For Emperor,Greg MacDonald (AusIMM) is the appointed Mineral Resource competent person.
 Current production
  using the equity method. Total gold production decreased in fiscal 2005 to 113,892 from 118,581 in fiscal 2004. The decrease inproduction resulted primarily from delays in the Philip Shaft Deepening Project; poor heavy vehicle availability due to delays in the re-build program and ageing fleet; lower than expected mining grades; high levels of absenteeism in the workforce; and flooding on thelower levels of the Smith Shaft in April 2005.
  Period ended June 30
 2005
 1
 Production
 Surface and underground operationsOre mined ('000 tons)..................................................................................................................................................
      1
 We increased our ownership in Emperor to 45.33% with effect from July 30, 2004 and Emperor is now accounted for using the equity method. As a
 result we have not disclosed the attributable portion of Emperor’s production results for fiscal 2004 and fiscal 2003.


65
 Exploration Projects
  the Tolukuma Section (through both brownfields and greenfields exploration). Total exploration and project expenditure for fiscal2005 was $2.1 million for the Tolukuma Section. During fiscal 2005, we lodged an application for a prospecting right in respect of theArgonaut area in South Africa. ERPM also lodged an application for a prospecting right over the Sallies area in South Africa. Boththese applications are pending at the Department of Minerals and Energy.
 South Africa
 Argonaut Project
  covered by the mineral rights covers approximately 19 miles (30 kilometers) from Durban Deep in the west to ERPM in the east with thepossible exploitation of part of the potential mineralized material striking 3 miles (5 kilometers) east/west from City Deep Mine toRobinson Deep Mine and extending from 9,900 feet to 13,200 feet (3,018 meters to 4,023 meters) below surface. Most of the mainexploration target area incorporated by our 42 square kilometers of mineral rights above the 5,000 meter depth contour of the MainReef Leader is covered by urban residential development. The mining activity may, as a result, give rise to an increase in seismicity andassociated environmental pollution in the immediate proximity of the mine. If operated, this would be the first mine in the world tooperate at such depths and the seismicity associated with the mining activity and the impact on the health and safety of the mineemployees working in the underground section is unknown at this stage. The environmental risks could result in public opposition to theproject and delay our application for the necessary permits, or prevent the implementation of the project.
  Main Reef and Main Reef Leader, sedimentological and structural interpretations of these major gold-bearing ore bodies across theformer Central Rand have been undertaken with the objective of defining sedimentological facies trends and delineating geozones forstatistical and geostatistical estimation purposes and predictive analysis. A log-linear extrapolation technique was applied to the trenddirections exhibited within the data for each geodomain, enabling the calculation of the likely distances over which the goldaccumulation decreases within the respective geodomains down the palaeoslope. The end product is a grade block model for the MainReef 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 previouslyreported. Due to unreliable data, no estimate of mineralized material was deduced for the Main Reef. Future work will include thedrilling of three additional boreholes to test the model and extrapolations and estimates, and upgrade and increase the mineralizedmaterial estimate within our mineral rights area.
    low Rand gold price and the enactment of the MPRD Act which delayed the issuing of a prospecting permit by the DME. Under theMPRD Act, the prospecting permit is classified as a pending application and, as a result, only geological modeling and resourceestimation took place.
  prospecting right in respect of the Argonaut area, which is pending at the Department of Minerals and Energy. The Argonaut Projectstill represents a promising, yet challenging deep-level mining development opportunity which is dependent on significant increases inthe Rand gold price before becoming viable.


66
 Papua New Guinea
 Tolukuma Section
  ML104 covers an area of 7.68 square kilometers and has extensive exploration tenements in the vicinity of the mine coveringapproximately 9,937 square kilometers and within 40 minutes flying radius of the mine site. The Tolukuma Section is being exploredusing geophysical surveys, interpretation of satellite images, mapping and sampling of streams. This is followed up by detailedmapping, trenching and drilling of prospective target areas.
  with long hole capability, and an additional rig for surface drilling. This brings the number of rigs on site to five in fiscal 2004,compared to only one in fiscal 2003. No new drills were added during fiscal 2005. The short-term focus will continue to be onincreasing the resource base at and around the Tolukuma Section.
  concentrated mostly within ML104. Some regional exploration was also carried out in a few of the outer ELs. An intensive diamond-drilling program with associated fieldwork is planned for the coming year. This work is aimed at testing more than sixteen drill targetsidentified and classified within ML104. More regional exploration work is also being planned for other ELs outside of EL580 andML104.
  Tolukuma’s five diamond drill rigs which includes three surface (DT250P, DT600O, LY 44) and two underground (LMA 90,KEMPE) were all utilized. All rigs except the DT250P stayed within ML104. The DT250P also drilled 3 holes at the Mt. Sen prospectwith EL580. During the year, a total of 68 holes have been drilled for a total of 23,487 meters.
  Degot/Fundoot with over 70,000 ounces contained gold potential. This structure has already been accessed from underground and islikely to be mined in the near future. The southern extension of this structure is currently being tested.
  (converged) has also been drill tested. A couple of high grade intersections have been obtained within this structure including one1.5 meters at 42.9 g/t. The southern extension is also being tested with the LMA 90 rig in the process of testing the Degot/Fundoot. Allresults from this structure will be reviewed to further assess the resource potential.
  Creek. Additionally, limited surface mapping and sampling resulted in the discovery of a number of new structures within thesouthern portion of the lease. The first two are the Tolukuma South and Tolukuma Southeast structures which returned highest trenchresults of 0.8 meters at 7.4 g/t and 1.0 meters at 3.9 g/t respectively. Further work is required in these areas. Exploration work was alsoundertaken in the following areas: Gira (under EL 1297), Aikora (under EL 1327) and Minaru (under EL 1264).
   EL No
 No of Sub blocks
 Area under EL (sq km)
 Status
 Expiry date
                                                        Totals
 2,692
 9,114


67
 Closed Operations
 North West Operations
 Overview
  Gold Mines Limited, 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 the Buffels Section and the Harties Section,which lie adjacent to each other within the Klerksdorp Goldfield on the northwestern rim of the Witwatersrand Basin.
    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, withapproximately 3,000 employees retrenched and the placing of No. 6 Shaft of the Harties Section on a “care and maintenance” program,effectively suspending the use of the asset. On March 16, 2004, we reopened the No. 6 Shaft at the Harties Section to mine high gradeareas on a selective basis. We recalled approximately 800 employees previously retrenched from the North West Operations to man thisshaft. On February 18, 2004, we announced the closure of the No. 11 Shaft in the Buffels Section after the revised work practicesimplemented 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 Section at our North West Operations on June 26, 2004, in order to restore profitability. An agreement was reached with all therelevant 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 thatcertain defined sustainability thresholds are met. This agreement resulted in the retrenchment of 120 employees at this mining operationduring fiscal 2005, at a cost of R 3.7 million ($0.6 million). At October 31, 2004, approximately 600 employees were employed at No. 10and 12 Shafts.
  consequence of the extensive damage caused by the earthquake, the No. 5 Shaft of the North West Operations was closed. There wascontinuing 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 MinesLimited, which order was granted on the same day. For further details, see the “Legal Proceedings” section of Item 4D: “Property Plantand Equipment.”
 Property
  kilometers) southwest of Johannesburg near the towns of Stilfontein and Klerksdorp, North West Province, and are reached via the R12Johannesburg-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). The Harties Section hadmining title to 15,560 acres (6,297 hectares) and freehold title to 375 acres (152 hectares), all held in the name of Buffels. The BuffelsSection consisted of one mining license, ML4/2001 in respect of statutory mining rights, and one prospecting permit, RP54/2002 inrespect of statutory mining rights and mineral rights held by the Buffels Section.
  addition to mining its lease area, the Buffels Section operated and mined the adjoining Harties Section mineral rights areas and anotherarea pursuant to royalty-based tribute agreements with Lucas Block Minerals Limited, a South African company, and the Harties Section.


68
   History
 1949
 Hartebeestfontein Gold Mining Company Limited, or Hartebeestfontein, was incorporated as a public company in SouthAfrica on June 20, 1949. The company is dormant and no longer trades.
 1995
 Buffelsfontein Gold Mines Limited, or Buffels, was incorporated and registered as a public company in South Africa onSeptember 20, 1995, under the name Camelian Investments (Pty) Ltd.
 Buffelsfontein Gold Mines Ltd on December 29, 1995. As of December 31, 1995, Buffels acquired the assets and liabilitiesof the Buffelsfontein mine division of Buffelsfontein Gold Mines Company Limited previously managed by GencorLimited, 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 onSeptember 21, 2003, with approximately 3,000 employees retrenched at a cost of $6.5 million and the placing of certaininfrastructure (No. 6 Shaft at the Harties Section) on a “care and maintenance” program.
 2004
 In March 2004, the No. 6 Shaft at the Harties Section was reopened to mine high grade areas on a selective basis. We recruited800 staff previously retrenched to man this shaft.In April 2004, the No. 11 Shaft at the Buffels Section 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 the Buffels Section 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 theemployees’ safety.On March 22, 2005, an application was made to the High Court of South Africa for the provisional liquidation ofBuffelsfontein 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 inBuffelsfontein 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&Jand accepted by the majority of Buffelsfontein creditors, including us, was approved and sanctioned by the High Court ofSouth Africa.All the conditions of the scheme have been met, and the order for the provisional liquidation of Buffelsfontein was lifted by theHigh Court of South Africa on November 1, 2005.
 Geology and Mineralization
  known as the Witwatersrand Basin, that exploit gold bearing reefs consisting of Vaal Reef ore and surface sources from previouslydiscarded low-grade rock dumps. The Vaal Reef is an oligomictic, quartz-pebble conglomerate no more than 20 inches (50centimeters) thick. Gold is present throughout the reef horizon, but is concentrated on the bottom contact, where carbon commonlyforms as a thin seam.
  the base of the Strathmore formation. The bulk of the Buffels Section Ore Reserves had been mined-out but the infrastructure was beingused to access remnant reserves and blocks originally bypassed because of structural complexity. Access from the surface to theunderground 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 stopepanels and was conveyed to the shaft, tipped into the ore-pass systems, hoisted to the surface and conveyed to the metallurgical plant forgold extraction.
  Witwatersrand Supergroup. Gold production at the Harties Section started in 1955 on the Vaal Reef. By the late 1990s the mine hadreached a position where its life was dependent on the mining of shaft pillars and scattered remnants. The Harties Section had beenconverted 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 inplace a medium-term operational plan including the opening up of old mining areas for remnant mining, and thirdly, developing asustainable life of mine plan that would have been supported by areas not included in the previous owners' mining plan due to high paylimits.


69
 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 GradeGold Plant, or LGGP, with limited underground material. These plants had a combined operating capacity of 260,000 tpm.
  Africa. In South Africa, Eskom operates a national power supply grid consisting of 24 power stations across the country. Electricity to theNorth 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 525volts for smaller devices and equipment used on the mine. The average annual power consumption is about 852 gigawatt hours, or GWHrand 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 thetailings complex. Based on the results of geo-chemical analyses performed, the tailings medium was prepared for vegetation by theaddition of lime to neutralize the natural acidic conditions and fertilizer. Vegetation was then established and care is taken to selectspecies 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, theopen surface areas on top of the tailings dam are ridge ploughed mechanically. This method significantly reduces dust re-suspension. Asan additional measure in inaccessible areas, environmentally friendly chemical and organic dust suppressants are employed, wherenecessary.
  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 Department of Minerals and Energy upon theprovisional liquidation of Buffelsfontein.
 Current Year Production
  noting that the fiscal 2005 results are represented up until March 22, 2005, the date that Buffelsfontein was placed into provisionalliquidation:
 Year ended June 30,
 2005
 1
 2004
 2003
 Production- Surface Operations
                          Total ounces produced
    Results of Operations ($)Revenues ('000) ...........................................................................................................................
        Non-US GAAP Financial DataCash cost per ounce of gold ($)
 2
      2
     1
 These operating and production results for the Buffels and Harties sections are for the period ending March 22, 2005, which is the date that
 Buffelsfontein Gold Mine Limited was placed under provisional liquidation.
 2
 Cash cost per ounce and total cost per ounce are non-US GAAP financial measures 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: “OperatingResults.”


70
 Durban Deep Section
 Overview
  situated on the northern edge of the Witwatersrand Basin immediately to the west of Johannesburg. Mining had been taking place withinthe lease area since the discovery of the Witwatersrand Goldfield in 1886 at nearby Langlaagte.
  withdrawal of our underground pumping subsidy, the deeper sections of the mine were flooded. On a combined basis, the Durban DeepSection produced more than 37 million ounces of gold prior to the cessation of operations.
  of a non-refundable fee of R1.5 million ($0.2 million), was granted an option to acquire the Durban Deep Section’s mine village forR15.0 million ($2.2 million). The option was exercised on November 19, 2005 and the option fee will be deemed part payment of thepurchase consideration.
 Property
  the west to the ERPM Section in the east. The Durban Deep Section is situated 9.3 miles (15 kilometers) west of Johannesburg andcontains mining title to 14,262 acres (5,772 hectares) and owns 3,667 acres (1,484 hectares) of freehold property. These includeadministrative buildings, hospital, recreation complexes, housing in both hostel and free-standing houses and a security complex. Wehave title to substantial land tracts on the outskirts of the City of Roodepoort, which is located in this section. We do not intend to convertour old order rights under the MPRD Act.
 Mining and processing
  maximum 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 withinthe lease area.
 Environmental and closure aspects
  submitted to the DME in December 2000. The drafting of the program was preceded by a comprehensive risk assessment process, duringwhich both residual and latent environmental risks and impacts were identified and prioritized. The risks identified are currently beingaddressed in accordance with the closure program.
  term dust suppression methods are currently being employed. In addition to dust suppression, amelioration and vegetation of the tailingsdams, the closure program is also focused on the sealing of shafts and openings to the surface, the demolition and rehabilitation of shaftinfrastructure and the rehabilitation of open surface areas.
  between the Western Basin and the Central Basin. Water has already begun to flood to the surface in this area from other neighboringmining operations. This water is of poor quality, containing heavy metals, sulphates and other pollutants. However, there has been noflooding of water to the surface on any of our properties located in the Western Basin.
  rehabilitation and environmental closure efforts continued in pursuit of the objectives of the mine’s Environmental Management Program.A total of 39 hectares of additional vegetation was established on 2L24 Dump and, with the exception of Circular Shaft, all previouslyoperational shafts have now been closed and capped. All plugs used have been approved by the DME which also performs periodicinspections during the sealing phase to monitor progress. However, despite these sealing programs, naturally occurring water conduits andother geological features which are not mine-related and may not be located on mine property will allow surface water, especially stormrunoff, to reach underground aquifers. This will eventually cause water levels to rise. The costs associated with sealing off all potentialwater ingress points at the Durban Deep Section have been included in our provision for environmental rehabilitation, restoration andclosure costs. The Company will continue to rehabilitate this land by breaking down the shaft heads and plugging holes.


71
  cost for the Durban Deep Section, in current monetary terms as at June 30, 2005, is $5.9 million. This has been included in the provisionfor environmental rehabilitation, restoration and closure costs on our balance sheet. A total of $2.1 million has been contributed to theEnvironmental Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who areappointed as trustees by the Master of the High Court of South Africa.
 West Wits Section
 Overview
  entire share capital of West Witwatersrand Gold Holdings Limited, which was the parent company of West Wits, as well as ConsolidatedMining Corporation Limited's loan to West Witwatersrand Gold Holdings Limited, on April 1, 1996. We also acquired the entire issuedcapital and the shareholders' claim and loan account of East Champ d'Or Gold Mine Ltd, a gold mining company with mining title in theWest Rand. The mining assets were sold to Bophelo Trading (Pty) Limited, subsequently renamed, Mogale Gold (Pty) Limited, orMogale, during fiscal 2004, effectively leading to the closure of the mining operation.
   Property
  about 22.0 miles (35.4 kilometers) west of Johannesburg, Gauteng Province. The mine is reached via the R28 Johannesburg-Krugersdorphighway.
  Luipaardsvlei. West Wits had mining title to 8,364 acres (3,790 hectares) and owns 72 acres (29 hectares) of freehold property on whichall of its mining operations are 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.
  and Atomaer (Pty) Limited, for the establishment of a regional underground water management vehicle. The ultimate objective of thisinitiative is to collectively collect, process and report environmentally sensitive information relating to the impact of underground waterseepage on to surface, to the Department of Water Affairs and Forestry, or DWAF. It has set itself the objective of putting in place therequisite infrastructure and technology to establish a commercially self-sustainable entity to extract underground water, treat the same andto dispose of it either for commercial or agricultural use. Representations to DWAF to allow the treatment and disposal of water oncommercial terms were favorably received.
  resources, considering the predominantly dry climate of South Africa, and also from an environmental perspective – a program thatcaptures and treats underground water before it decants into the Tweelopiesspruit area and the Krugersdorp Game Reserve (which is justupstream from the Sterkfontein Caves system) is in place. If the above initiatives fail and the ingress of water and the subsequent floodinginto sensitive areas occur, and to the extent that liability is attributed to us, and not only to West Witwatersrand Gold Mines Limited, theamounts involved could be significant.


72
 History
 1967
 West Witwatersrand Gold Mines Ltd, or West Wits, was incorporated and registered as a public company in South Africaon December 21, 1967.
 1996
  2000
  2002
 We entered into an agreement with Bophelo Trading (Pty) Limited, subsequently renamed Mogale Gold (Pty) Limited, orMogale, for the sale of the West Wits gold plant, freehold areas, surface rights permits and certain related assets.
 2003
   2004
   2005
 West Wits enters into an agreement with Randfontein Estates Gold Mines Limited and Atomaer (Pty) Limited, for theestablishment of a regional underground water management vehicle.
 Mining and processing
  This decision was taken after the South African government withdrew the water pumping subsidy. Without the subsidy, mining at theWest Wits Section became prohibitively expensive. The mining operation is an agglomeration of old mines on the Randfontein Basinseparated from the main part of the Witwatersrand Basin by a geological structure known as the Witpoortjie Horst. Over fifteen differentgold-bearing pebble horizons have been mined. Ore has been mined from outcrops at the surface down to a maximum depth ofapproximately 5,900 feet (approximately 1,800 meters).
  conglomerates and quartzites dipping at an average of 18 degrees. The combined West Wits Section produced more than 1.0 millionounces of gold since inception, before the cessation of underground and open-pit operations at the end of August 2000. Subsequent to thecessation of mining operations, the metallurgical plant at the West Wits Section was taken over by the Crown Section for the processingof sand dumps only.
 Environmental and closure aspects
  West Wits Section although certain aspects of this have been assumed by Mogale. Commensurate with the decision to close theseoperations, a detailed closure program was prepared and submitted to the DME in December 2000. The drafting of the program waspreceded by a comprehensive risk assessment process, during which both residual and latent environmental risks and impacts wereidentified and prioritized. The risks identified are currently being addressed by the West Wits Section, in accordance with the closureprogram submitted to the DME. In order to mitigate the impact of windblown dust from dormant tailings dams in proximity tosurrounding communities, short-term dust suppression methods are currently being employed. Although this is to continue until 2006, theprogram is being run along with a vegetation program, currently focusing on the main tailings impoundments in question, namely themain mine complex. During fiscal 2004, and as part of the rehabilitation program, a total of 17,000 trees were planted on the complex andkey surface areas were rehabilitated and grassed. Preliminary indications are that the tree species have established well.
    at the West Wits Section. In addition, DWAF has authorized the Council of Geoscience to rehabilitate the sources outside of themining area. Further to this, rehabilitation of the main tailings dam was started during fiscal 2004, with ridge-ploughing and theestablishment of dry land vegetation on the top surface of the dam.
  cost for the West Wits Section, in current monetary terms as at June 30, 2005, is $1.7 million. This has been included in the provision forenvironmental rehabilitation, restoration and closure costs on our balance sheet. A total of $1.8 million has been contributed to theEnvironmental Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who areappointed as trustees by the Master of the High Court of South Africa.


73
 Current year production
  and 2004. However, the following table details the operating and production results from the West Wits Section for the past three fiscalyears:
 Year ended June 30,
 2005
 2004
 2003
 Production
 Surface OperationsOre mined ('000 tons)..................................................................................................................
            Results of Operations ($)Revenues ('000) ............................................................................................................................
        Non US GAAP Financial DataCash cost per ounce of gold ($)
 1
      1
     1
 Cash cost per ounce and total cost per ounce are non-US GAAP financial measures of performance that we use to determine cash generating
 capacities of the mines and to monitor performance of our mining operations. For reconciliation to production costs see Item 5A: “OperatingResults.”


74
 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 thesame officers. The cases have been consolidated in the Southern District of New York. We expect that a consolidated amended complaintwill be filed on behalf of a group of lead plaintiffs selected by the Court to represent the putative class of plaintiffs alleged in thecomplaints. We anticipate that a response to such a complaint will be required some time in early 2006. To date, neither us, nor theindividual defendants have been formally served with a statement of claim regarding these matters.
  23, 2003 to February 25, 2005. The complaints allege generally that we and the individual defendants made false and misleading publicstatements regarding, among other things:
        our officers named in the complaints. We are not currently in a position to estimate the extent of any losses that may result from thesecurities class action.
 Invalid Issuance of Ordinary Shares in Connection with the Rawas Acquisition
  Nominees Pty Ltd, Maxidrill Pty Ltd, PT Petrosea TBK, Repadre International Corporation, Minproc Engineering Pty Ltd, Rio TintoRawas Holdings Ltd, Continental Goldfields Ltd, Consolidated African Mines Ltd, JCI (Isle of Man) Ltd, Weston Inv. Ltd andConsolidated African Mines Australia Pty Ltd, all of which were creditors of Laverton or its subsidiaries, below the average stated capitalprice. At the time, our then executive chairman, Mr. R.A.R. Kebble, was a director of Laverton Gold NL and JCI Gold Limited. Theseordinary shares were ostensibly issued pursuant to the planned acquisition of Rawas, a gold mine located in Indonesia, in considerationfor, or in anticipation of receiving, shares in and claims against various companies with ownership interests in Rawas and its miningrights. Evidence came to light revealing that the ordinary shares were issued without our legal authority and suggesting that this occurredas a result of a transaction entered into for the benefit of certain third parties. However, because of subsequent trades, splits andconsolidations, it was no longer possible to distinguish the affected shares from all of the other ordinary shares resulting in their identitybeing lost. This meant that it was no longer possible to identify the invalidly issued shares or their holders. Accordingly, it was notpossible to remove these invalidly issued shares from our members' register. Under the South African Companies Act, 1973 (asamended), the High Court of South Africa is permitted to validate an invalid share issuance. During a shareholders' meeting in 2002, ourshareholders, by special resolution, resolved to ratify the share issuance. We subsequently made an application to the High Court of SouthAfrica to validate the invalid issuance. This application was successful and the High Court validated the issuance in July 2002.
    their claims against the companies in the Rawas group in exchange for those shares. However, legal action has begun both in SouthAfrica and Australia.
  South Africa, against Messrs. R.A.R. Kebble, M. Prinsloo, J. Stratton and H. C. Buitendag and JCI Limited. The following claims arebeing pursued:


75
           Liquidation of Buffelsfontein Gold Mine Limited
  under provisional liquidation after an 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 asthe Margaret Shaft of the neighboring Stilfontein Gold Mines Limited, or Stilfontein. The latter arrangement occurred in terms of anagreement entered into in 1992 between Stilfontein and Hartebeestfontein Gold Mines Limited, or Hartebeestfontein. Hartebeestfonteinbecame a wholly-owned subsidiary of Buffelsfontein when Buffelsfontein subsequently acquired Hartebeestfontein.
  Africa for an order to compel us to continue with the pumping operations after it was announced that Buffelsfontein had been placed intoprovisional liquidation. Relief was also sought against the relevant government departments to either assume responsibility for, orcontribute to the pumping of underground water. These proceedings were postponed after the DWAF issued various directives underSection 19 of the Water Affairs Act against us, the provisional liquidators of Buffelsfontein, Harmony Gold, AngloGold Ashanti andStilfontein to continue with pumping operations and to contribute to pumping costs in equal shares. A total of three directives have beenissued, 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 orobligations related to environmental rehabilitation and the management and pumping of underground water. The proposed scheme ofarrangement was conditional upon DWAF agreeing to substitute us with S&J to the extent that DWAF envisaged imposing furtherresponsibility on us. On October 21, 2005, the scheme of arrangement for the acquisition of Buffelsfontein proposed by S&J and acceptedby the majority of Buffelsfontein creditors, including us, was approved and sanctioned by the High Court of South Africa. All theconditions of the scheme have been met, and the order for the provisional liquidation of Buffelsfontein was lifted by the High Court ofSouth Africa on November 1, 2005.
     Other Proceedings
  Supreme Court of Western Australia for payment of A$2,794,318 ($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. No trial date has been set asyet.
  Mr. R. Bryer in the Supreme Court of Western Australia for payment of A$902,000 ($622,650) in respect of unauthorized and unduepayments made to Cartier Management (Pty) Ltd, and overpayment to Goldspark Ltd and Transit Securities Inc. It is alleged that paymentwas made to facilitate the intended acquisition of Dome Resources NL by favoring Mr. J.P. Boyer, a director of Dome Resources NL atthe time, as well as other reasons.


76
  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. Thecontract was also entered into in May 2000. However, we believe that this contract is not enforceable as it was not authorized by ourdirectors or shareholders nor was it authorized by Dome's directors or shareholders. Therefore, we and Dome have not made any paymentto Mr. M. Silver. We believe that this action is without merit and will continue to vigorously defend against it.
  that they are owed $148,000 as payment under an invoice issued in August 2000 for financial services. The Court ruled in favor ofNewshore on March 31, 2004, ordering us to pay the amount claimed. We have since instituted appeal proceedings. Our claim againstNewshore is still pending.
  our executive chairman, Mr. M.M. Wellesley-Wood and Associated Intelligence Network (Pty) Limited, or AIN. AIN is a privateinvestigator firm. Their claim is based on allegations that we hired AIN to invade their privacy by obtaining personal information aboutthem and to cause them embarrassment and commercial harm. They seek compensation for damages suffered as a result of these allegedactions 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 damagesclaim is unique under South African law. Initial hearings have taken place to decide a preliminary point raised by us that no such claimexists 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 andadjudicate this issue. Mr. B Kebble has since passed on, and it is uncertain whether the executors of his estate intend to pursue this matter.Should they proceed, 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 periodbeginning 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 ofshare-options that he held at the time of his resignation from our board. Both these claims are being defended.
  R21.6 million ($3.4 million) plus interest for option fees on shares that we held in Randgold & Exploration Ltd, and in respect of whichwe extended an option to purchase to JCI Ltd and CAM Ltd against payment of an agreed option fee, plus a further claim for thereimbursement of costs, totaling R3.0 million ($0.5 million) which we had incurred on behalf of the defendants in the attempted corporatereconstruction of Western Areas Ltd and Randfontein Estates Gold Mine Ltd. The matter was heard on August 30, 2004. At this datepartial settlement of certain small claims related to the larger JCI Ltd and CAM Ltd claim, to the value of R2.4 million ($0.4 million), wasawarded to us by the High Court of Johannesburg. On October 21, 2004, the High Court of Johannesburg ordered JCI Ltd and CAM Ltdto 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’sand CAM Limited’s counterclaim to recover the earlier part-payment was also dismissed with costs. JCI Ltd and CAM Ltd made anapplication to the High Court of Johannesburg for leave to appeal, which was rejected. In fiscal 2005, we received full payment of thisclaim.
  complaint with the South African Competition Commission against Iscor, a South African steel producer. The complaint alleges that Iscoris abusing its dominant position by charging excessive prices for its local flat steel products and providing inducements for steelpurchasers to refrain from importing competing steel products. The Competition Commission dismissed our claim, and the matter hassince been referred to the Competition Tribunal, who has the authority to overrule the determination of the commission. Pleadings in thematter have closed and we await the allocation of a hearing date.


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 financialstatements and management's assessment of factors and trends which are anticipated to have a material effect on the Company'sfinancial 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 financialstatements have been prepared in accordance with US GAAP. Our discussion contains forward looking information based on currentexpectations that involve risks and uncertainties, such as our plans, objectives and intentions. Our actual results may differ from thoseindicated in such forward looking statements.
    Business overview
 Key drivers of our operating results and principal factors affecting our operating results
 the principal uncertainties and variables facing our business and the primary factors that have a significant impact onour operating performance.
 Recent acquisitions and dispositions
  Key financial and operating indicators
  Application of critical accounting policies, a discussion of accounting policies that require critical judgments and
 estimates.
 Operating results
   Liquidity and capital resources, an analysis of our cash flows, borrowings and our anticipated funding requirements andsources.


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 and Papua NewGuinea. In addition, we hold a 45.33% equity interest in Emperor Mines Limited, or Emperor, in Fiji. We divide our worldwideoperations into two geographic regions, based on revenue generated from the location of the seller, as follows:
  South Africa comprises the Blyvoor Section. We also hold a 40% equity interest in Crown Gold Recoveries (Pty)Limited which includes the Crown and ERPM Sections. On March 22, 2005, the North West Operations (Hartiesand Buffels Sections) were placed under provisional liquidation after an earthquake damaged its No. 5 Shaft. As aresult we report the 2005, 2004 and 2003 information relating to the North West Operations as a discontinuedoperation and all other operations as continuing operations. We have adjusted the results for prior reporting periodsaccordingly.
  Australasia is comprised of the Tolukuma Section, a 20% interest in the Porgera Joint Venture, or Porgera, and a45.33% interest in Emperor.
  Reserves, a $33.5 million net loss after tax and 32% of our total assets. The Australasian Operations accounted for 63% of ourcontinuing production, 28% of our Ore Reserves, a net loss after tax of $3.9 million and 68% of our total assets.
   was to acquire existing under-performing mines in South Africa at relatively low acquisition costs, and attempting to turn them intoprofitable business units by introducing low-cost mining methods and reducing costs through employing our experience in managingmarginal gold mines to more efficiently utilize existing infrastructures. Since 1999 our focus has been to expand our operationsoutside of South Africa by acquiring lower cash cost and higher margin mines than those in South Africa, through the acquisition ofDome Resources NL (Tolukuma Section), our 20% interest in Porgera and our 45.33% interest in Emperor (Vatukoula Section).
  series of events that culminated in a devastating earthquake. As a result, these operations were placed under provisional liquidation onMarch 22, 2005. This, as well as the continued weakness of the Dollar, price increases in key consumables in South Africa andoperational difficulties ultimately resulted in a decrease in our results for fiscal 2005 in comparison to fiscal 2004 and fiscal 2003. Ourbalance sheet has strengthened as a result of the liquidation of the North West Operations, which had a negative $17.8 million netasset value, as at March 22, 2005.


79
 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 thedeveloping countries in which we operate.
 Gold price
  related to the price of gold which can fluctuate widely and is affected by numerous factors beyond our control, including industrial andjewellery demand, expectations with respect to the rate of inflation, the strength of the Dollar (the currency in which the price of goldis 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 andsupply of gold may affect gold prices, but not necessarily in the same manner that supply and demand affect the prices of othercommodities. The supply of gold consists of a combination of new production from mining and existing stocks of bullion andfabricated gold held by governments, public and private financial institutions, industrial organizations and private individuals. As ageneral rule we sell the gold produced at market prices to obtain the maximum benefit from prevailing gold prices, although we havepreviously entered into hedging arrangements, such as forward sales or other derivative instruments, which established a price inadvance for the sale of our future gold production. During fiscal 2002, we undertook a major restructuring of our hedge book,designed to close out our hedge positions.
  2005 fiscal year
 2004 fiscal year
 % increase
                     2004 fiscal year
 2003 fiscal year
 % increase
                     2003 fiscal year
 2002 fiscal year
 % increase
                      production has been sourced from our South African Operations during those three fiscal years, the impact of the Rand/Dollarexchange rate has been significant on our operating results. Whereas the Dollar gold price has shown consistent growth over the lastthree fiscal years, the Rand gold price (based on average prices for the year) has decreased from R3,023 per ounce, in fiscal 2003, toR2,619 per ounce in fiscal 2005.


80
 Gold production and production costs
  during fiscal 2005, in comparison to 466,284 ounces in fiscal 2004, and 330,253 ounces in fiscal 2003. The North West Operations(our discontinued operation) recorded production of 199,850 in fiscal 2005, 341,861 in fiscal 2004 and 462,743 in fiscal 2003.
  include labor, contractor services, stores, electricity and other related costs, incurred in the production of gold. Labor is the largestcomponent of production costs, constituting 51% of production costs for fiscal 2005, as the majority of our mining operations are deeplevel underground mines which are more labor intensive.
  million tonnes milled at an average yield of 2.24g/t, to 233,094 ounces in fiscal 2004, produced from 3.1 million tonnes milled at anaverage yield of 2.33g/t, to 161,878 ounces produced from 3.5 million tonnes milled at an average yield of 1.43g/t in fiscal 2005. Dueto the decline in the Rand gold price over the last three fiscal years, our South African Operations have increasingly focused onmining higher grade ore panels, to achieve an increased yield from the tonnages milled. During fiscal 2005, however, the benefits ofmining higher grade ore were negated as a result of poor initial recoveries from the Slimes Dam project at Blyvoor.
  milled at an average yield of 13.07g/t, to 233,190 ounces, produced from 1.1 million tonnes milled at an average yield of 6.38g/t infiscal 2004, to 271,708 ounces, produced from 1.4 million tonnes milled at an average yield of 5.99g/t in fiscal 2005. Our 20% interestin Porgera contributed 195,394 ounces in fiscal 2005, produced from 1.2 million tonnes milled at an average yield of 5.06g/t, incomparison with 147,475 ounces, produced from 0.9 million tonnes milled at an average yield of 4.87g/t in fiscal 2004 (acquiredOctober 14, 2003). The Tolukuma Section has been a consistent producer at a high grade of 11.25g/t in fiscal 2005, 13.60g/t in fiscal2004 and 13.07g/t in fiscal 2003.
   1
  2
   General economic factors
  to a number of factors, which could impact on our profitability, resulting from exchange rate fluctuations, inflation and other risksrelating to these specific countries (refer to Item 3D.: “Risk factors”). In conducting mining operations, we recognize the inherent risksand uncertainties of the industry, and the wasting nature of the assets.
 Effect of exchange rate fluctuations
  generated in South Africa, and approximately 43% of our total revenues are generated from operations in Papua New Guinea. Most ofour production costs, therefore, are denominated in local currencies, such as the South African Rand and the Papua New GuineanKina. In fiscal 2005, we derived 100% of our revenues in Dollars and incurred 83% of our production costs in these local currencies.Although fiscal 2005 was marked by a stabilization of the trend noted in the prior year of the weakening of the Dollar against theRand, this currency movement still accounted for approximately $4 per ounce, or 6%, of the total increase in cash costs per ounce forour South African Operations from fiscal 2004. The weakening of the Dollar against the Rand accounted for $121 per ounce, or a101%, increase in cash costs per ounce for our South African Operations from fiscal 2003 to fiscal 2004. As the price of gold isdenominated in Dollars and we realize our revenues in Dollars, the depreciation of the Dollar against these local currencies reducesour profitability. Based upon average rates during the respective years, the Rand strengthened by 10% against the Dollar in fiscal 2005compared to fiscal 2004 and 24% from fiscal 2003 to fiscal 2004. This has led to an effective decrease of 8.5% in the average Randgold price in comparison to fiscal 2004 and 11.2% in fiscal 2004, compared to fiscal 2003. The Kina, based on average rates in therespective fiscal years, strengthened by 4% against the Dollar in fiscal 2005 compared to fiscal 2004 and 16% in fiscal 2004 comparedto fiscal 2003.
 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 – Reconciliation of cashcosts per ounce, total costs and total costs per ounce.”
 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– Reconciliation of cashcosts per ounce, total costs and total costs per ounce.”


81
  fluctuations in the Dollar gold price or the exchange rate movements of the Rand and Kina. If revenue from gold sales falls for asubstantial period below our cost of production at our operations, we could determine that it is not economically feasible to continuecommercial production at any or all of our operations or to continue the development of some or all of our projects. Our weightedaverage total costs per ounce for the continuing operations of our wholly-owned subsidiaries, as well as Porgera, was $449 per ounceof gold produced in the fiscal 2005 year, $418 per ounce in the 2004 fiscal year and $151 per ounce in the 2003 fiscal year. Theaverage gold price received, from continuing operations, was $423 per ounce in fiscal 2005, $393 per ounce in fiscal 2004 and $331per ounce in fiscal 2003.
  such as the Rand, Kina 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, 2005, approximately 64% of our cash and cashequivalents, being $23.2 million, were held in such currencies in comparison to 66%, or $14.8 million, at June 30, 2004 and 100%, or$44.4 million, at June 30, 2003.
 Effect of inflation
  which our gold is sold, if there is a significant increase in inflation in South Africa and in Papua New Guinea, without a concurrentdevaluation of the local currency or an increase in the price of gold, our costs will increase, negatively affecting our operating results.
   Year ended June 30,
 2005
 (%)
 2004
 (%)
 2003
 (%)
         Net effect
     comparison to historical trends. However, historically the effect of the movements in the exchange rate has exacerbated the effect onprofitability experienced as a result of the movement in the CPIX inflation rate, as illustrated above.
   Year ended June 30,
 2005
 (%)
 2004
 (%)
 2003
 (%)
         Net effect
      South African political, economic and other factors
  various economic, fiscal, monetary and political factors that affect South African companies generally. South African companies aresubject to exchange control regulations. Governmental officials have from time to time stated their intentions to lift South Africa’sexchange control regulations when economic conditions permit such action. Over the last few years, certain aspects of exchangecontrols for financial institutions and individuals have been incrementally relaxed. It is, however, impossible to predict when theSouth African Government will remove exchange controls in their entirety. South African companies remain subject to restrictions ontheir ability to export and deploy capital outside of the Southern African Common Monetary Area, unless dispensation has beengranted by the South African Reserve Bank. For a detailed discussion of exchange controls, see Item 10D.: “Exchange controls.”


82
  introduction of the MPRD Act, private ownership in mineral rights and statutory mining rights in South Africa could be acquiredthrough the common law or by statute. Now, all mineral rights have been placed under the custodianship of the South Africangovernment under the provisions of the MPRD Act, and old order proprietary rights need to be converted to new order rights of usewithin certain prescribed periods. We have submitted certain applications in this regard. This process is described more fully underItem 4B.: “Business Overview – Governmental regulations and its effect on our business - South Africa – Common Law MineralRights and Statutory Mining Rights.”
 Papua New Guinea political, economic and other factors
  civil rebellion, expropriation, nationalization, renegotiation of existing contracts, mining licenses and permits, changes in laws ortaxation policies, currency exchange restrictions and international monetary fluctuations.
 Recent acquisitions and dispositions
  Limited, or Mogale, for the sale of the West Wits gold plant and certain related assets for R25.0 million ($2.4 million) to process certainsand dumps, surface materials, freehold areas and surface right permits located at the West Wits Section. We retain the right to mineunderground by virtue of certain mining titles and mining authorizations on the property, subject to the conversion of these rights in termsof the MPRD Act. As part of the agreement, we agreed to indemnify Mogale against any loss, damage or expense which Mogale mightincur as a result of any liability in connection with the transferred assets, the cause of which arose prior to this sale. The effective date ofthis sale was July 21, 2003, when all of the conditions precedent were fulfilled and Mogale was granted a mining license.
  Item 4B.: "Business Overview"), resulting in the sale of 60% of our interest in Crown Gold Recoveries (Pty) Limited, or CGR, to KhumoBathong Holdings (Pty) Limited, or KBH, for R105.0 million ($11.6 million). In October 2002, CGR acquired 100% of the outstandingshare capital of, and loan accounts in, East Rand Proprietary Mines Limited, or ERPM, for R100.0 million ($11.0 million) from Daun etCie AG, Courthiel Holdings (Pty) Ltd, KBH, Claas Edmond Daun, Paul Cornelis Thomas Schouten, Moltin Paseka Ncholo, MasechabaPalesa Moletsane Ncholo, Michelle Patience Baird, Derek Sean Webbstock.
  Resources Porgera Limited, or MRP. The transaction was affected through the amalgamation of OMP, MRP and our wholly-ownedsubsidiary, Dome Resources (PNG) Limited. OMP changed its name to DRD (Porgera) Limited. This resulted in us acquiring a 20%interest in the Porgera Joint Venture in Papua New Guinea for $77.1 million, comprising $16.7 million in shares and $59.2 million incash, net of cash acquired. The Porgera mine's main business focus is the extraction of gold.
  Accordingly, we have been, and expect to continue to be, involved in a number of acquisitions and dispositions as part of this globaltrend and to identify value-adding business combinations and acquisition opportunities. To ensure that our Ore Reserve base ismaintained, or increased, we are currently focusing on acquiring low cost, high margin mines in other global regions. Our recentacquisitions, over the last fiscal year, include an increase in our interest in Emperor from 19.78% as at June 30, 2004, to 45.33%through a takeover offer completed on July 30, 2004. We acquired 29,097,269 Emperor shares in exchange for 6,612,676 of ourordinary shares, valued at $16.6 million, based on the market value of our shares on the date of issue.
  Gold Mines Limited, our subsidiary that owns the North West Operations, which order was granted on the same day. OnOctober 6, 2005, we concluded an agreement with Simmer and Jack Limited, or S&J, for the sale of our shareholdings in Buffelsfonteinsubject to certain conditions. These include indemnifying us against any liabilities or obligations that could arise relating to environmentalrehabilitation and the management and pumping of underground water. The proposed scheme of arrangement was conditional upon thefollowing:
  Department of Water Affairs and Forestry, or DWAF, agreeing to substitute us with S&J to the extent that DWAF envisagedimposing further responsibility on us;
  the acceptance by the High Court of South Africa and the majority of Buffelsfontein’s creditors of a scheme arrangementproposed by S&J; and


83
  majority of Buffelsfontein creditors, including us, was approved and sanctioned by the High Court of South Africa. The order for theprovisional liquidation of Buffelsfontein was lifted by the High Court of South Africa on November 1, 2005 and all the conditions of thescheme have been met.
  the acquisition by KBH of a 15% stake in our South African Operations. The intention of the transaction is to bring us into fullcompliance 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. The transaction has been facilitated by the IDC,which agreed to a debt restructuring in CGR. The transaction comprises the exchange of 75% of KBH’s 60% stake in CGR, including itswholly-owned subsidiary
  ERPM, and a cash payment of $2.0 million (R13.2 million) for an effective 15% interest in our wholly-owned subsidiary, Blyvooruitzicht Gold Mining Company Limited, or  Blyvoor. The new structure results in Khumo Gold SPV (Pty) Limited, or Khumo Gold, which is an affiliate of KBH,
  acquiring initially, a 15% interest in a newly created vehicle, DRDGOLD South African  Operations (Pty) Limited, or DRDGOLD SA, which includes ERPM, CGR and Blyvoor. We will retain an 85% interest. In addition,  Khumo Gold was granted an option, exercisable over the next three years, to acquire a further 11% interest in DRDGOLD SA for $1.4 million  (R9.3 million). Khumo Gold will place a portion of the further 11% interest in a new Employee Trust. DRDGOLD Limited will subscribe for $4.8 million (R31.8 million) new Khumo Gold preference shares. The proceeds from these preference shares will be 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 CGR, 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). Dr. Paseka Ncholo, our Non-Executive Chairman, will take  over as Executive Chairman of DRDGOLD SA with effect from November 1, 2005.
  of a non-refundable monthly fee of R0.5 million ($0.1 million) payable until the exercise of the option, was granted an option to acquirethe Durban Deep Section’s mine village for R15.0 million ($2.2 million). The option was exercised on November 19, 2005 and the optionfee will be deemed part payment of the purchase consideration.
  our wholly owned subsidiary, DRD (Isle of Man) Limited, or 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 Gold Mines Limited and all of our explorationtenements in Papua New Guinea. Currently we, through DRD (Isle of Man), hold a 45.33% interest in Emperor. Implementation of thetransaction requires the restructuring of our offshore operations, whereby DRD (Isle of Man) will transfer the following materialassets to our new wholly-owned subsidiary, DRDGOLD (Offshore) Limited, or DRD (Offshore):
    an A$10.0 million ($7.6 million) convertible loan facility which DRD (Isle of Man) has advanced to Emperor, in terms ofwhich we can elect to convert such debt facility into additional Emperor shares at A$0.30 ($0.23) per Emperor share.
          million, which is subject to certain completion adjustments to reflect the change in the capital position of both Emperor and DRD (Isleof Man) between October 1, 2005, which is the effective date, and completion of the transaction. The purchase consideration will besettled by:
  the issue of 751,879,699 new Emperor shares to DRD (Offshore), issued at A$0.35 ($0.26) per share which currentlyequates to $200.0 million; and


84
    A$3.0 million ($2.3 million). In a separate transaction, we have also undertaken to, pursuant to any existing Allied shareholder electingnot to follow its rights, take up not more than 17,420,000 shares, to be issued by Allied to raise an additional A$7.0 million ($5.3 million)at an issue price of A$0,40 ($0.30) per share. Both these transactions are subject to South African Reserve Bank approval. The capitalraising, which represents approximately 17.5% of Allied's share capital will also be subject to Allied shareholder approval, which Alliedhas undertaken to seek to obtain by no later than January 20, 2006.
  Key financial and operating indicators
  production costs, cash costs per ounce and total costs per ounce, capital expenditure and Ore Reserves. The following table presentsthe key performance measurement data for the past three fiscal years:
 Operating data
 Continuing operations
 1
 Year ended June 30,
 2005
 2004
 2003
                                 Discontinued operation
 1
 Year ended June 30,
 2005
 2004
 2003
                                 1
 For fiscal 2005, 2004 and 2003 the operating data excludes our 40% share of our equity accounted associate, CGR, including the Crown and ERPM
 Sections, and our 45.33% (2004: 19.78% and 2003: 19.81%) investment in Emperor, but includes our 20% attributable interest in the proportionatelyconsolidated Porgera Joint Venture. On March 22, 2005, the North West Operations were placed under provisional liquidation. As a result we reportthe 2005, 2004 and 2003 information relating to the North West Operations, as a discontinued operation and all other operations as continuingoperations. We have adjusted the results for prior reporting periods accordingly.


85
 Revenue
  Year ended June 30,
 Continuing operations
 2005
 $'000
 2004
 $'000
 2003
 $'000
      1
     Total South African Operations
 68,370
 90,066
 86,549
      2
     Total Australasian Operations
 115,239
 93,188
 22,870
 Total
 183,609
 183,254
 109,419
 Discontinued operation
  3
  81,538
 130,036
 151,923
  million, with the average gold price received by us increasing to $423 per ounce, compared to $393 per ounce in fiscal 2004. Theeffect on revenue of the increased gold price was offset by the decrease in production of 32,698 ounces from fiscal 2004. On March22, 2005 we announced the provisional liquidation of the North West Operations. Revenues from the North West Operations for theperiod ended March 22, 2005 were $81.5 million compared to $130.0 million in fiscal 2004. These operations have been treated as adiscontinued operation.
  average gold price received by us increasing to $393 per ounce in fiscal 2004, compared to $331 per ounce in fiscal 2003. Theacquisition of our 20% interest in Porgera contributed $60.4 million to revenue for fiscal 2004. Other movements in revenue areattributable to changes in production volumes, from a total of 330,253 ounces in fiscal 2003 to 466,284 ounces in fiscal 2004, fromcontinuing operations. The North West Operations recorded revenue of $151.9 million in fiscal 2003 and $130.0 million in fiscal2004.
 1
 With effect from July 21, 2003, we disposed of the West Wits operating mining assets in a black economic empowerment deal to Mogale, for $2.4
 million.
 2
 With effect from October 14, 2004, we acquired a 20% interest in the unincorporated Porgera Joint Venture. This interest is proportionately
 consolidated from that date.
 3
 On March 22, 2005, the North West Operations were placed under provisional liquidation. As a result we report the 2005, 2004 and 2003
 information as a discontinued operation and all other operations as continuing operations. We have adjusted the results for prior reporting periodsaccordingly.


86
 Gold production
  Year ended June 30,
 Production in ounces
 Continuing operations
 2005
 2004
 2003
              1
     Total South African Operations
 161,878
 233,094
 262,157
  2
         Total Australasian Operations
 271,708
 233,190
 68,096
 Total
 433,586
 466,284
 330,253
  3
  199,850
 341,861
 462,743
          from 466,284 ounces produced in fiscal 2004. Gold production from our continuing South African Operations decreased by 31% from233,094 ounces produced in fiscal 2004 to 161,878 ounces in fiscal 2005. This was as a result of the poor recoveries at the SlimesDam Project and the restructuring, which impacted productivity, completed in the second quarter of fiscal 2005 at Blyvoor. Goldproduction at the Australasian Operations increased by 17%, from 233,190 ounces in fiscal 2004, to 271,708 ounces in fiscal 2005.This is as a result of improved production at Porgera in the first two quarters of our financial year, reflecting higher grades and theinstallation of a secondary crusher. The North West Operations were placed under provisional liquidation on March 22, 2005,following a series of events culminating in a devastating earthquake, and have therefore been treated as a discontinued operation.
  ounces from 330,253 ounces produced in fiscal 2003. Gold production from our South African Operations decreased by 11% from262,157 ounces produced in fiscal 2003 to 233,094 ounces in fiscal 2004. This is attributable to us ceasing mining unprofitable goldreserves as a result of the lower Rand per kilogram gold price. Gold production at the Australasian Operations increased by 242%from 68,096 ounces in fiscal 2003 to 233,190 ounces in fiscal 2004, mainly due to the acquisition of our 20% attributable interest inthe Porgera Joint Venture and improved gold recovery at the Tolukuma Section.
   1
 With effect from July 21, 2003, we disposed of the West Wits operating mining assets in a black economic empowerment transaction to Mogale, for
 $2.4 million.
 2
 With effect from October 14, 2004, we acquired a 20% interest in the unincorporated Porgera Joint Venture. This interest is proportionately
 consolidated from that date.
 3
 On March 22, 2005, the North West Operations were placed under provisional liquidation. As a result we report the 2005, 2004 and 2003
 information as a discontinued operation and all other operations as continuing operations. We have adjusted the results for prior reporting periodsaccordingly.


87
 Cash costs
 1
 and total costs
 2
 per ounce
  continuing operations increased to $315 per ounce of gold from $307 per ounce of gold in fiscal 2004. Total costs from our continuingoperations increased to $449 per ounce of gold from $418 per ounce of gold in fiscal 2004.
  ounce to $464 per ounce, compared to fiscal 2004. Cash costs per ounce from our Australasian Operations increased by 2%, from $221per ounce to $226 per ounce compared to fiscal 2004. The increase in cash costs per ounce at our South African Operations was mainlydue to the strengthening of the Rand against the Dollar, price increases in key consumables (labor, inventories and electricity), adecrease in production due to the poor recoveries at the Slimes Dam Project and the restructuring completed in the second quarter offiscal 2005 at Blyvoor. The increase in cash costs per ounce at our Australasian Operations was due to less efficient mining andincreased costs associated with consumables and services, especially the cost of fuel.
  costs per ounce for the Australasian Operations decreased by 21%, compared to fiscal 2003. The increase in cash costs per ounce atour South African Operations was mainly due to the strengthening of the Rand against the Dollar and operational difficulties due tothe mining of below pay-limit panels, poor advances per blast, lower than expected mine call factors, increased lock-up in the plantdue to the ending of surface rock dump feed to the mill and poor recoveries from the Slimes Dam Project. The decrease in cash costsper ounce at our Australasian Operations was primarily due to our acquisition of Porgera which operated at a cash cost of $215 perounce in fiscal 2004.
  2005. This increase was mainly due to employment termination costs of $4.2 million ($10 per ounce) at the Blyvoor Section and ourhead 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.
  2004. This increase was mainly due to the weakening of the Dollar against the local operating currencies. The total cost per ounce of$151 recorded in fiscal 2003 included a profit on financial instruments of $42.4 million ($128 per ounce) as a result of the closing outof put and call options. In addition, the total cost per ounce of $418 recorded in fiscal 2004 included additional depreciation of$19.5 million ($41 per ounce), primarily due to the acquisition of Porgera.
 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.”


88
 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 costsand exploration costs. Cash costs per ounce are calculated by dividing production costs by ounces of gold produced. Cash costs perounce have been calculated on a consistent basis for all periods presented.
    finance charges and other operating and non-operating costs, but excludes taxation, minority interest, equity in loss from associatesand the cumulative effect of accounting changes. These costs are excluded as the mines do not have control over these costs and theyhave little or no impact on the day-to-day operating performance of the mines. Total costs per ounce are calculated by dividing totalcosts by attributable ounces of gold produced. Total costs and total costs per ounce have been calculated on a consistent basis for allperiods 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 anindicator of our performance. While the Gold Institute has provided definitions for the calculation of cash costs, the calculation of cashcosts per ounce, total costs and total costs per ounce may vary significantly among gold mining companies, and these definitions bythemselves do not necessarily provide a basis for comparison with other gold mining companies. However, we believe that cash costsper ounce, total costs and total costs per ounce are useful indicators to investors and management of an individual mine's performanceand of the performance of our operations as a whole as they provide:
          the period ending June 30, 2005, is presented below. In addition, we have also provided below detail of the ounces of gold producedby mine for each of those periods.


89
 For the year ended June 30, 2005(in $'000, except as otherwise noted)
 Continuing operations
 Discontinued
 operation
 Blyvoor
 West Wits
 1
 Other
 2
 Total South
 African
 Operations
 Porgera
 3
 Tolukuma
 Other
 Total
 Australasian
 Operations
 Total
 North West
 4
 Production costs
    75,032
    61,488
 136,520
 100,695
 Plus:
     (57)
    13,854
 13,797
 971
      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)
      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
 With effect from July 21, 2003, we disposed of the West Wits operating mining assets in a black economic empowerment deal, to Mogale Gold Limited.
 2
 Relates to other non-core operating entities within the Group.
 3
 With effect from October 14, 2004, we acquired a 20% interest in the Porgera Joint Venture.
 4
 On March 22, 2005, the North West Operations were placed under provisional liquidation. As a result we report the 2005, 2004 and 2003 North West Operations’ information as a discontinued
 operation and all other operations as continuing operations. We have adjusted the results for prior reporting periods accordingly.
 5
 The gold production numbers exclude production from our 40% held associate, Crown Gold Recoveries (Pty) Limited, which holds the Crown and ERPM Sections, and our 45.33% investment in
 Emperor, but include our 20% attributable interest in the Porgera Joint Venture.


90
 For the year ended June 30, 2004(in $'000, except as otherwise noted)
 Continuing operations
 Discontinued
 operation
 Blyvoor
 West Wits
 1
 Other
 2
 Total South
 African
 Operations
 Porgera
 3
 Tolukuma
 Other
 Total
 Australasian
 Operations
 Total
 North West
 4
 Production costs
    91,555
    51,471
 143,026
 134,465
 Plus:
     1,444
    24,531
 25,975
 4,160
      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
 -
      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
 With effect from July 21, 2003, we disposed of the West Wits operating mining assets in a black economic empowerment deal, to Mogale Gold Limited.
 2
 Relates to other non-core operating entities within the Group.
 3
 With effect from October 14, 2004, we acquired a 20% interest in the Porgera Joint Venture.
 4
 On March 22, 2005, the North West Operations were placed under provisional liquidation. As a result we report the 2005, 2004 and 2003 North West Operations’ information as a discontinued
 operation and all other operations as continuing operations. We have adjusted the results for prior reporting periods accordingly.
 5
 The gold production numbers exclude production from our 40% held associate, Crown Gold Recoveries (Pty) Limited, which holds the Crown and ERPM Sections, and our 19.78% investment in
 Emperor, but include our 20% attributable interest in the Porgera Joint Venture.


91
 For the year ended June 30, 2003(in $'000, except as otherwise noted)
 Continuing operations
 Discontinued
 operation
 Blyvoor
 West Wits
 1
 Other
 2
 Total South
 African
 Operations
 Total
 Australasian
 Operations
 Total
 North West
 3
 Production costs
    71,656
 19,105
 90,761
 144,598
 Plus:
     2,280
 6,561
 8,841
 1,761
      507
 (27)
 480
 934
 Total production costs
    74,443
 25,639
 100,082
 147,293
 Plus:
     680
 -
 680
 821
     (29)
 593
 564
 687
     (20,387)
 1,519
 (18,868)
 (1,216)
     6,084
 615
 6,699
 210
     -
 -
 -
 -
     1,520
 130
 1,650
 -
     (42,384)
 -
 (42,384)
 (1,437)
     (1,729)
 -
 (1,729)
 -
     (5,302)
 -
 (5,302)
 -
      7,120
 1,501
 8,621
 2,207
 Total costs
    20,016
 29,997
 50,013
 148,565
  4
     262,157
 68,096
 330,253
 462,743
     273
 281
 275
 312
     76
 441
 151
 321
 1
 With effect from July 21, 2003, we disposed of the West Wits operating mining assets in a black economic empowerment deal, to Mogale Gold Limited.
 2
 Relates to other non-core operating entities within the Group.
 3
 On March 22, 2005, the North West Operations were placed under provisional liquidation. As a result we report the 2005, 2004 and 2003 North West Operations’ information as a discontinued
 operation and all other operations as continuing operations. We have adjusted the results for prior reporting periods accordingly.
 4
 The gold production numbers exclude production from our 40% held associate, Crown Gold Recoveries (Pty) Limited, which holds the Crown and ERPM Sections, and our 19.81% investment in
 Emperor, but include our 20% attributable interest in the Porgera Joint Venture.


92
 Capital expenditure
  fiscal 2004. At our continuing South African Operations, capital expenditure decreased from $9.2 million in fiscal 2004, to $0.8 million infiscal 2005, due to an increased focus on efficient utilization of existing assets. This expenditure included the installation of a Knelsenconcentrator and Acacia reactor at the Blyvoor plant. Capital expenditure in the Australasian Operations, increased from $12.2 million infiscal 2004, to $20.6 million in fiscal 2005. Of this expenditure $17.2 million relates to Porgera, mostly as a result of capitalized deferredstripping costs of $11.1 million, and $3.4 million relates to the Tolukuma Section, as a result of additions to plant, and equipment.
  fiscal 2003, which represents a $14.4 million, or 206%, increase in capital expenditure on a Group level. At our continuing SouthAfrican Operations, capital expenditure increased from $4.3 million in fiscal 2003 to $9.2 million in fiscal 2004, mainly due to theinclusion of new capital development projects, that included the completion of the No. 4 and 5 slimes dam project at Blyvooramounting to $6.9 million, and the effects of the strengthening of the South African Rand against the Dollar by 16% during fiscal2004. Capital expenditure in the Australasian Operations, increased from $2.7 million in fiscal 2003, to $12.2 million in fiscal 2004.The increase partly related to the strengthening of the local currencies against the Dollar, and the inclusion of $8.7 million of capitalexpenditure at Porgera, which included capitalized deferred stripping costs of $4.1 million.
 Ore Reserves
  compared to approximately 6.0 million ounces at June 30, 2004, representing a 7% decrease – mostly due to depletion during the year.The reduction was offset in part by continued efforts to explore and prove up Ore Reserves at the Tolukuma Section. Our Ore Reservesattributable to our continuing operations increased from 5.9 million ounces of gold in fiscal 2003 to 6.0 million ounces in fiscal 2004. Asat June 30, 2004, 5.0 million ounces of Ore Reserves, in addition to those reflected above, were attributable to the North West Operations.These have been lost following the provisional liquidation of the North West Operations announced on March 22, 2005.
  Year ended June 30,
 ('000 ounces)
 2005
 2004
 2003
 Continuing operationsBlyvoor Section ...............................................................................
    Total South African Operations
 3,998
 4,329
 5,780
  1
         Total Australasian Operations
 1,569
 1,640
 145
 Total
 5,567
 5,969
 5,925
 Associates
 2
 ......................................................................................
 986
 505
 1,211
 Discontinued operationNorth West Operations
 3
  -
 5,047
 8,483
 1
 Our attributable 20% share of the Proven and Probable Ore Reserves in the Porgera Joint Venture is based on the information disclosed by Placer Dome Inc. (which
 has a 75% interest in the Porgera Joint Venture) in its Annual Report for the fiscal year ended December 31, 2004, as filed with the SEC on Form 40-F on March 5,2004. The Porgera Ore Reserves are estimated as at December 31, 2004.
 2
 Comprise our 40% interest in CGR, which owns the Crown and ERPM Sections, as well as, for fiscal 2005, our 45.33% interest in Emperor.
 3
 On March 22, 2005, the North West Operations were placed under provisional liquidation. As a result we report the 2005, 2004 and 2003 information as a
 discontinued operation.


93
 Application of critical accounting policies
  appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree ofuncertainty and are based on our historical experience, terms of existing contracts, management's view on trends in the gold miningindustry and information from outside sources.
                   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 theindividual mines) using the units of production method. Under the units of production method, we estimate the amortization rate based onactual production over total Proven and Probable Ore Reserves of the particular mine. This rate is then applied to actual costs capitalizedto date to arrive at the amortization expense for the period. Proven and Probable Ore Reserves of the particular mine reflect estimatedquantities of economically and legally recoverable reserves, as determined in accordance with the SEC's Industry Guide 7 under the USSecurities Exchange Act of 1934, as amended. The estimate of the total reserves of our mines could be materially different from the actualgold 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 inmanagement’s estimate of the total Proven and Probable Ore Reserves, would impact the amortization charges recorded in ourconsolidated 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-pitoperations stripping costs are expensed in the period in which they are incurred. Stripping costs included in mining assets as atJune 30, 2005, for Porgera are $12.5 million (June 30, 2004: $3.5 million; June 30, 2003: $nil) with $11.1 million capitalized to miningassets during fiscal 2005 (fiscal 2004: $4.1 million; fiscal 2003: $nil). During fiscal 2005, the average stripping ratio was 7.1 incomparison with the Life of Mine stripping ratio of 3.5. Wedge and mudstone failure on the West Wall of the Stage 5 pit at Porgeracreated unplanned waste material which is in the process of being removed and negatively affected the stripping ratio. The strippingratio is determined based on the life of mine plan. The estimate of the total reserves of a mine could be materially different from theactual gold mined and from the actual usage of a mine due to changes in the factors used in determining the economic value of ourmineral reserves and deferred stripping costs, such as the gold price and foreign currency exchange rates. Any change in management’sestimate of the total expected future life of a mine would impact the amortization charge recorded and deferred stripping capitalized in ourconsolidated financial statements.Impairment of mining assets
  Accounting for the Impairment or Disposal of Long-Lived Assets
  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, adramatic change in the amount of the Ore Reserves, a substantial drop in the gold price, a change in the law or environment in the countryin which the Ore Reserves are based or gold is sold, forecasts showing lack of long-term profitability or production costs are in excess ofan amount originally expected when the asset was acquired or constructed. Recoverability of an asset or asset group is assessed by


94
 comparing the carrying amount of an asset or group of assets to the estimated future undiscounted net cash flows of the asset or group ofassets. Estimates of future cash flows include estimates of future gold prices and foreign exchange rates. Therefore, changes could occurwhich may affect the recoverability of our mining assets. If an asset or asset group is considered to be impaired, the impairment which isrecognized is measured as the amount by which the carrying amount of the asset or group of assets exceeds the discounted future cashflows expected to be derived from that asset or group of assets. The asset or asset group is the lowest level for which there are identifiablecash flows that are largely independent of other cash flows. In carrying out the economic valuations, an assessment is made of the futurecash 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 2005,$0.7 million was recorded as an impairment and during fiscal 2004, $1.4 million (attributable to our discontinued operation) was recordedas an impairment through applying these principles. No impairments were recognized during fiscal 2003.
 Deferred income and mining taxes
  temporary differences by applying current statutory tax rates applicable to future years to differences between financial statementamounts and the tax bases of certain assets and liabilities. Changes in deferred tax assets and liabilities include the impact of any tax ratechanges enacted during the year.
  determinations are based on the projected realization of tax allowances and tax loss carry forwards. Assessing the recoverability ofdeferred tax assets requires management to make significant estimates related to expectations of future taxable income. If these tax assetsare not more likely than not to be realized, an adjustment to the valuation allowance would be required, which would be charged toincome 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 thetax 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 theimmediately preceding three fiscal years. As a result of these determinations, additional valuation allowances of $10.1 million, $16.9million and $nil were recorded during fiscal 2005, 2004 and 2003, respectively. The bulk of these related to the continuing South AfricanOperations. In addition, valuation allowances relating to our discontinued operation, the North West Operations, amounted to $nil,$70.2 million and $50.3 million in fiscal 2005, 2004 and 2003, respectively.
 Reclamation and closure costs
 Accounting
 for Asset Retirement Obligations,” or SFAS 143. SFAS 143 came into effect for fiscal years beginning after June 15, 2002 and weadopted it on July 1, 2002. SFAS 143 requires that the fair value of liabilities for asset retirement obligations be recognized in the periodin which they are incurred. A corresponding increase to the carrying amount of the related asset, where one is identifiable, is recorded andis depreciated over the life of the asset. Prior to the adoption of SFAS 143, we accrued for the estimated reclamation and closure liabilitythrough annual charges to earnings over the estimated life of the mine.
  headgear and shaft infrastructure. Estimates of these costs are based on our knowledge at the time of creating the provision. Determiningthese costs is complex and requires management to make estimates and judgments because most of the removal obligations will befulfilled in the future and contracts and regulations often have vague descriptions of what constitutes removal. These estimates are subjectto changes in regulations and unexpected movements in inflation rates and are, therefore, subject to annual review to ensure that the assetand liability is a fair reflection of the expected reclamation and closure costs as at June 30 of every year. The actual liability forrehabilitation costs can vary significantly from our estimate, if our assessment of these costs changes. As we use the expected cash flowtechnique 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 atJune 30, 2005, the discount rate was determined to be 7.26%. As a result of changes in estimates, additional liabilities of $0.1 million,$2.0 million and $0.6 million were raised in fiscal 2005, 2004 and 2003, respectively, including movements related to the discontinuedoperation.


95
 Environmental rehabilitation costs
  dams, revegetation of rock dumps and the rehabilitation of open cast areas are accrued as tailings are deposited. The estimated costs ofrehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances. Based oncurrent environmental regulations and known rehabilitation requirements, our management has included its best estimate of theseobligations in our Provision for Rehabilitation. However, it is reasonably possible that these estimates of our ultimate rehabilitationliabilities could change as a result of changes in regulations or cost estimates. As a result of changes in estimates, additional liabilities of$3.7 million, $1.5 million and $0.8 million were raised in fiscal 2005, 2004 and 2003, respectively, including the discontinued operation.
   Collectability of receivables
  period and amount of cash flows which will be received. In determining this expectation, operational and economical circumstancesaffecting the receivable are considered. These principles were applied in evaluating the collectability of the receivables owed by CGR,ERPM, KBH and Mogale. Advances to the value of $1.9 million and $5.2 million were provided for in fiscal 2004 and 2003,respectively. No further advances were made during fiscal 2005, however we provided for $0.6 million against the receivable owed byMogale.


96
 Operating results
 Comparison of financial performance for fiscal year ended June 30, 2005 with fiscal year ended June 30, 2004
 Revenue
   Impact of change in volume
 $’000
 Total
 revenue
 2004
 Acquisitions/
 (dispositions)
 Internal
 growth/
 (decline)
 Impact of
 change in
 price
 Net change
 Total
 revenue
 2005
 Blyvoor Section..................................
       Total South African Operations......
 90,066
 -
 (27,989)
 6,293
 (21,696)
 68,370
 Porgera Joint Venture.........................
  -
     Tolukuma Section ..............................
  -
     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 atthe continuing South African Operations, because of poor recoveries at the Slimes Dam Project, the restructuring completed in thesecond quarter of our financial year at Blyvoor and the yield at these operations decreasing in fiscal 2005. The decrease in productionin 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
   Impact of change in volume
 $’000
 Total
 production
 costs
 2004
 Acquisitions/
 (dispositions)
 Internal
 growth/
 (decline)
 Impact of
 change in
 costs
 Foreign
 exchange
 Net change
 Total
 production
 costs
 2005
 Blyvoor Section
  ...........................
 90,366
 -
 (21,844)
 (3,664)
 8,956
 (16,552)
 73,814
 Other
 1
 ..........................................
 1,189
 -
 -
 29
 -
 29
 1,218
 Total South African Operations.
 91,555
 -
 (21,844)
 (3,635)
 8,956
 (16,523)
 75,032
 Porgera Joint Venture
  ..................
 31,650
 -
 14,698
 (11,374)
 1,236
 4,560
 36,210
 Tolukuma
  Section........................
 19,821
 -
 (2,884)
 7,567
 774
 5,457
 25,278
 Other
 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
 Relates to non-operating entities within the Group.


97
  Years ended June 30,
 Costs
 2005
 2004
              production costs in that region. Production costs are linked directly to the level of production of a specific fiscal year. We incurredproduction costs of $136.5 million in fiscal 2005, compared to $143.0 million in fiscal 2004. The decrease of 5% is mostly as a resultof a decrease in production volumes at the continuing South African Operations which have been partially offset by an increase inproduction at the Australasian Operations. The majority of our production costs are incurred in local currencies and foreign exchangemovements on these costs also contributed to the increase in production costs.
 Rehabilitation provision
  million ($nil of this balance relating to the discontinued North West Operations) as opposed to $39.1 million at June 30, 2004 ($18.5million 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 onMarch 22, 2005, relating to the North West Operations, was transferred to the liquidators.
  million for fiscal 2004. Growth in the environmental trust funds amounted to $0.8 million during fiscal 2005, with $16.9 million of thefiscal 2004 balance having been transferred to the liquidators of Buffelsfontein Gold Mine Limited (the North West Operations). Theshortfall relating to the continuing operations is expected to be financed by ongoing financial contributions to the EnvironmentalRehabilitation Trust Funds of the respective mining operations.
 Depreciation and amortization
  decrease relates to a reduction in depreciation on mine development at the Tolukuma Section, due to a decrease in the life of mine forunderground operations and non-recurring amortization charges during fiscal 2004, which were associated with the restructuring ofthe Tolukuma Section.
 Employment termination costs
  2005, these costs mostly relate to a retrenchment process following a 60-day review at the Blyvoor Section, where 1,619 employeeswere retrenched at a cost of $3.1 million, by October 5, 2004. In addition, retrenchments at our head office, to improve corporateefficiencies and minimize corporate expenditure, gave rise to an expense of $1.2 million in fiscal 2005.
 Impairment of assets
  the estimated fair value of these assets. We have negotiated the sale of these mining properties and the estimated fair value wasdetermined during these negotiations.
 Management and consulting fees
  2004. These expenses mostly related to consulting fees for the evaluation of possible acquisitions in fiscal 2005, preparatory work forcomplying with the Sarbanes-Oxley Act of 2002 and capital raisings.


98
 Profit/(loss) on derivative instruments
  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 tohigher 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 2004. In fiscal 2005, management instituted tighter cost controls together with retrenchments at corporate level, whichcontributed to the reduction of these expenses.
 Interest and dividends
  2005. This was mainly as a result of investing excess cash from borrowings and capital raising, in high interest bearing accounts heldat financial institutions.
 Unrealized foreign exchange gains
  The unrealized foreign exchange loss of $9.3 million for fiscal 2005, compared to a gain of $10.7 million for fiscal 2004, representedthe effect of the translation of monetary items, primarily external debt, which is denominated in currencies other than our functionalcurrencies.
 Interest expense
  primarily as a result of obtaining new borrowing facilities from Investec Bank Limited and Investec Bank (Mauritius) Limited duringfiscal 2005.
 Income and mining tax expense
  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, theincrease in the current tax charge mostly relates to the inclusion of the Porgera Section for a full year compared to nine months infiscal 2004. In fiscal 2004, $5.5 million of the deferred tax charge related to the South African Operations and $1.3 million related tothe Australasian Operations. Valuation allowances of $30.5 million have been raised against the deferred tax assets of the SouthAfrican Operations in fiscal 2005, compared to $96.4 million in fiscal 2004. The decrease is primarily as a result of the liquidation ofthe North West Operations in fiscal 2005.
 Equity in loss from associates
  impairment of the carrying amount of the investment and $7.2 million relating to losses recognized against our equity investment. Noamount was recorded for CGR, as no further advances were made to this associate during fiscal 2005 and the investment is carried atnil value in fiscal 2005 (2004: $nil). An impairment of $8.8 million was recognized in fiscal 2004 relating to advances made duringthat fiscal year to CGR, which were seen by management to be irrecoverable.


99
 Loss from discontinued operation, net of taxes
  Gold Mines Limited, our subsidiary which owns the North West Operations, which order was granted on the same day. As a result ofthe liquidation, a profit of $18.1 million was recorded in fiscal 2005. Included in the calculation of this profit is expenditure of $7.3relating to the liquidation. This expenditure includes additional wages of $4.5 million, $1.5 million set aside for a social plan, $0.8million relating to essential services, such as pumping, and $0.5 million relating to legal and other costs.
    This continued during fiscal 2005, with the production of 199,850 ounces of gold from 1.9 million tonnes of ore mined, resulting in ayield 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 of3.37 g/t.
  designed to restore the operations to profitability. Proposals were received in a consultative forum in which both management andorganized labor participated, and were distributed to the Department of Labour and the Department of Minerals and Energy, for theirinput. 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 12Shafts in operation on condition that certain defined sustainability thresholds were met. This agreement resulted in the retrenchment of120 employees at this mining operation during fiscal 2005 at a cost of R3.7 million ($0.6 million).
  these mining assets and determined that the carrying value was not recoverable. The difference between the carrying amount and fairvalue 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 assetsdiscounted at the credit adjusted rate.


100
 Comparison of financial performance for the fiscal year ended June 30, 2004 with fiscal year ended June 30, 2003
 On March 22, 2005, the North West Operations were placed under provisional liquidation. We have adjusted our consolidatedstatement of operations for all periods presented to reflect the North West Operations as a discontinued operation.
 Revenue
   Impact of change in volume
 $’000
 Total
 revenue
 2003
 Acquisitions/
 (dispositions)
 Internal
 growth/
 (decline)
 Impact of
 change in
 price
 Net change
 Total
 revenue
 2004
 Blyvoor
  Section................................
 81,753
 -
 (4,798)
 13,111
 8,313
 90,066
 West Wits Section
  ............................
 4,796
 (4,796)
 -
 -
 (4,796)
 -
 Total South African Operations......
 86,549
 (4,796)
 (4,798)
 13,111
 3,517
 90,066
 Porgera Joint
  Venture.......................
 -
 60,445
 -
 -
 60,445
 60,445
 Tolukuma Section
  ............................
 22,870
 -
 5,917
 3,956
 9,873
 32,743
 Total Australasian Operations......
 22,870
 60,445
 5,917
 3,956
 70,318
 93,188
 Total................................................
 109,419
 55,649
 1,119
 17,067
 73,835
 183,254
  the Australasian Operations of $70.3 million. The acquisition of a 20% interest in Porgera on October 14, 2003, contributed to$60.4 million of the increase in revenue from Australasian Operations. The remainder of the increase in revenue from the AustralasianOperations consisted of $5.9 million from improved output and an increase in the Dollar price of gold which contributed $4.0 millionat the Tolukuma Section. Despite production difficulties at the Blyvoor Section and the continued strengthening of the South AfricanRand against the Dollar, an increase in the Dollar gold price negated the effect of lower production volumes at the Blyvoor Section.
 Production costs
   Impact of change in volume
 $’000
 Total
 production
 costs
 2003
 Acquisitions/
 (dispositions)
 Internal
 growth/
 (decline)
 Impact of
 change in
 costs
 Foreign
 exchange
 Net
 change
 Total
 production
 costs
 2004
 Blyvoor Section
  ........................
 65,240
 -
 (3,829)
 7,486
 21,469
 25,126
 90,366
 West Wits Section
  ....................
 4,859
 (4,859)
 -
 -
 -
 (4,859)
 -
 Other
 1
 .......................................
 1,557
 -
 -
 (680)
 312
 (368)
 1,189
 Total South African Operations
 71,656
 (4,859)
 (3,829)
 6,806
 21,781
 19,899
 91,555
 Porgera Joint Venture
  ...............
 -
 31,650
 -
 -
 -
 31,650
 31,650
 Tolukuma
  Section.....................
 17,498
 -
 4,527
 (4,963)
 2,759
 2,323
 19,821
 Other
 1
 .......................................
 1,607
 -
 (1,607)
 -
 -
 (1,607)
 -
 Total Australasian Operations
 19,105
 31,650
 2,920
 (4,963)
 2,759
 32,366
 51,471
 Total.........................................
 90,761
 26,791
 (909)
 1,843
 24,540
 52,265
 143,026
 1
 Relates to non-operating entities within the Group.


101
  Years ended June 30,
 Costs
 2004
 2003
              production costs in that region. Production costs are linked directly to the level of production of a specific fiscal year. Production costsin fiscal 2004 increased by 58% to $143.0 million compared to production costs of $90.8 million in fiscal 2003. This increase wasprimarily attributable to the significant appreciation of the Rand against the Dollar during fiscal 2004 and the acquisition of Porgera. A23.9% strengthening in the average Rand/US Dollar exchange rate was noted during fiscal 2004, with a 13.7% strengthening of theaverage Kina/US Dollar exchange rate. In addition, operational difficulties at our South African Operations due to the mining ofbelow pay-limit panels, poor advances per blast, lower than expected mine call factors, increased lock-up in the plant due to theending of surface rock dump feed to the mill and poor recoveries from the Slimes Dam Project led to an increase in production costs.
     Rehabilitation provision and amounts contributed to environmental trust funds
  million, $31.6 million relating to the South African Operations (of this $18.5 million related to the North West Operations) and $7.5million relating to the Australasian Operations, as compared to $24.6 million at June 30, 2003, with $16.0 million relating to the SouthAfrican Operations (of this $13.5 million related to the North West Operations which has been disclosed as a discontinued operation)and $8.6 million relating to the Australasian Operations. Accretion of $3.4 million was recorded in fiscal 2004, and $1.4 million wasrecorded in fiscal 2003.
  operation) was invested in our various environmental trust funds as at the end of fiscal 2004, as compared to $17.9 million (of this$13.8 million related to the North West Operations which has been treated as a discontinued operation) for fiscal 2003. The increase ismostly attributable to the strengthening of the Rand against the Dollar in fiscal 2004. Additional contributions were also made duringfiscal 2004, due to under funding of the liability. The shortfall between the funds in the trust and the estimated provisions, in SouthAfrica, is expected to be financed by ongoing financial contributions over the remaining production life of the mine.
 Depreciation and amortization
  $8.8 million for fiscal 2003. This increase is mainly due to our increase in the asset base for our Australasian Operations, as a result ofour acquisition of a 20% interest in Porgera ($9.3 million) and the continued weakening of the Dollar against the local functionalcurrencies ($1.3 million). The remainder of the increase ($6.8 million) is as a result of an increase in the amortization rate due todecreased Ore Reserves of 6.0 million ounces.
 Employment termination costs


102
 Impairment of assets
   Loans made that were seen to be irrecoverable, which amounted to $1.9 million. $1.1 million of loans were advanced toenable the West Wits mine to be sold as part of black economic empowerment to Mogale. This balance is seen to beirrecoverable due to Mogale having been placed under judicial management during fiscal 2004. $0.8 million relates to fundsadvanced to KBH, which we impaired as KBH's main asset is a 60% interest in CGR and ERPM which are incurring losses.
  Goodwill in Net-Gold Services Limited, acquired during fiscal 2004, impaired as a result of losses recorded in this entity,which amounted to $1.0 million.
  Management and consulting fees
   Loss/(profit) on derivative instruments
  profit of $42.4 million in fiscal 2003. The decrease mostly relates to the closing out of a major portion of the Eskom gold forelectricity contract during fiscal 2004. During fiscal 2004, a total amount of $25.1 million was used to close out 265,000 ounces underthe Eskom gold for electricity contract. As at June 30, 2004, the remaining portion on the contract was 50,000 ounces. The appreciation ofthe Rand during fiscal 2003 and the resulting positive effect that these changes had on the fair value of our derivative instrumentscontributed to the profit on derivative financial instruments in that period.
 Selling, administration and general charges
  2003. The increase of $14.0 million comprised realized foreign exchange movements of $8.1 million, additional head office salaryexpenses of $2.2 million, expenses in respect of Porgera of $2.2 million, additional DRD (Isle of Man) office costs of $1.1 million andcosts associated with preparatory work for complying with the Sarbanes-Oxley Act of 2002 of $0.2 million. As most of theadministrative charges are incurred in South Africa, where our head office is based, the strengthening of the Rand against the Dollarby 24% had a significant impact on the administrative costs incurred.
 Interest and dividends
  fiscal 2004. The decrease was mostly attributable to a decrease in our cash and cash equivalents from $44.4 million as at June 30,2003 to $22.5 million as at June 30, 2004, and interest income of $3.2 million accrued to us in respect of interest on amounts owed byassociates, during fiscal 2003.
 Unrealized foreign exchange gains
  The unrealized foreign exchange non-cash gain of $10.7 million for fiscal 2004, compared to $11.2 million for fiscal 2003, representsthe effect of the translation of monetary items, primarily external debt, which is denominated in currencies other than our functionalcurrencies.
 Interest expense
  primarily to the inclusion of a full year of interest for our 6% Senior Convertible Notes due 2006, which were issued on November 12,2002, increasing the interest charge from $4.7 million in fiscal 2003 to $5.9 million in fiscal 2004.


103
 Income and mining tax expense
  Porgera and a deferred tax charge of $6.8 million mainly comprising of valuation allowances raised against deferred tax assets atBlyvoor. During fiscal 2003, a deferred tax charge of $34.3 million was recorded and a deferred tax credit of $18.4 million wasrecorded as a result of changing the tax rate from 30% in fiscal 2002 to the maximum mining tax rate applicable to our South Africanmining operations of either 37% or 46% for fiscal 2003.
 Equity in loss from associate
  during fiscal 2004. Following the retroactive restatement for the change to the equity method in accounting for the investment inEmperor, a loss of $3.1 million was recorded against our equity investment for fiscal 2004. During fiscal 2003 our attributable portionof our associate’s losses amounted to $1.7 million which were recorded against our equity investment in our associate. In addition,advances of $5.2 million were impaired in fiscal 2003.
 Loss from discontinued operation, net of tax
  owned subsidiary, Buffelsfontein Gold Mines Limited, which owns the North West Operations, which order was granted on the sameday. During fiscal 2004 a net loss after taxation of $20.8 million was recorded, versus a net loss after taxation of $22.6 million in fiscal2003.
    of 341,861 ounces of gold from 3.2 million tonnes of ore mined, resulting in a yield of 3.37 g/t. During fiscal 2003 463,743 ounces ofgold were produced from 8.3 million tonnes of ore milled, with a yield of 1.74 g/t. The shift towards high-grade ore panels wasprompted by a series of 60-day operation reviews. On July 21, 2003, we entered into a 60−day review period on our North WestOperations designed to restore the operations to profitability. The time period of the review coincides with statutory limitationsimposed by the Labour Relations Act to implement strategic changes involving a substantial reduction in labor force. This proposalwas submitted to all stakeholders, including organized labor, the Department of Labour and the Department of Minerals and Energyfor their input. An agreement was reached with all labor organizations and the process was completed on September 21, 2003, withapproximately 2,400 employees retrenched at a cost of $6.5 million and the placing of certain infrastructure (No. 6 Shaft at the HartiesSection) on a “care and maintenance” program. On March 16, 2004, we reopened the No. 6 Shaft in the Harties Section of the NorthWest Operations, to mine higher-grade areas on a selective basis. We recalled 400 staff previously retrenched from the North WestOperations to man this shaft. On February 18, 2004, we announced that the No. 11 Shaft at the Buffels Section of the North WestOperations was to be closed after the revised work practices, implemented based on the operational review, proved to beunsustainable. As a result, 600 employees were retrenched, at a cost of $0.6 million. As a result of these reviews an impairment chargeof $1.3 million was recorded in fiscal 2004. The implementation of the recommendations of the 60-day reviews were, however, unableto curb the increase in cash cost per ounce
 1
  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.”


104
 5B. LIQUIDITY AND CAPITAL RESOURCES
 Net cash utilized by operating activities
  of $25.1 million for fiscal 2004 and cash utilized by operating activities of $23.9 million for fiscal 2003. During fiscal 2005, the networking capital movement represented an inflow of cash of $7.1 million, compared to an inflow of $9.1 million in fiscal 2004. In linewith our hedging policy which precludes forward selling of gold, the amount of derivative instruments have decreased resulting in adecrease in the cash outflow associated with these instruments. In fiscal 2004, $25.1 million was used to close out 265,000 ounces underthe Eskom gold for electricity contract, followed by another $3.6 million in fiscal 2005 to close out the remaining balance of the Eskomgold for electricity contract. The decrease in cash utilized in fiscal 2005 compared with fiscal 2004 was primarily due to improvedprofitability from our operating activities. For the last three fiscal years, our operating activities consistently utilized cash. This is mainlyattributable to the marginal nature of the South African Operations and the pressures experienced as a result of a decline in the Rand goldprice without a corresponding decrease in production costs.
 Net cash utilized in investing activities
  million in fiscal 2003. Investing activities during fiscal 2005 included $6.9 million with regards to taking up our share of the EmperorRights offering, $1.7 million relating to costs of the Emperor share offer and capital expenditure of $21.4 million relating to ourcontinuing operations and $3.5 million relating to our discontinued operation (North West Operations). The increase in cash utilized ininvesting in fiscal 2004, compared to fiscal 2003, was a result of funds advanced to CGR and ERPM of $8.8 million, our acquisition of a20% interest in the Porgera Joint Venture for $59.2 million, net of cash acquired, our acquisition of a 50.25% interest in Net-GoldServices Limited for $0.6 million, net of cash acquired, and increased capital expenditure at our continuing operations of $21.4 million(2003: $7.0 million) and $5.5 million (2003: $6.4 million) at our discontinued operation. The cash outflow in fiscal 2003 was a result ofour acquisition of a 19.81% stake in Emperor for $9.6 million and capital expenditure at our continuing operations of $7.0 million anddiscontinued operation of $6.4 million, which was partially offset by cash inflows from the disposal of mining assets and CGR.
            Reserve development, building a slimes dam reclamation facility at the Blyvoor Section and the inclusion of our 20% share of the capitalexpenditure 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 deferredstripping costs of $4.1 million.
  equipment and development, upgrading existing underground operations and upgrading metallurgical plants. Redundant capitalequipment was sold during the year, the proceeds of which amounted to $2.2 million. Significant capital projects for fiscal 2005included:


105
  fiscal 2005. We expect to incur $15.0 million of capital expenditure on mining equipment and development, upgrading existingunderground operations and upgrading current metallurgical plants as follows:
       Net cash generated in financing activities
    entered into a facility of $15.0 million with Investec (Mauritius), of which $10.0 million had been drawn down at June 30, 2005. Thefacility may be used to finance future acquisitions or rights offers by companies in which we wish to acquire shares, or with prior writtenconsent of Investec (Mauritius), it may be used for any other purpose. Of the total shares issued in fiscal 2005, we issued 17,000,000shares 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 offiscal 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 arevised final offer of five of our shares for every twenty two shares in Emperor held. The revised offer represented a 14% increase overthe previous offer. On July 30, 2004, our offer to Emperor’s shareholders closed with us having received acceptances from Emperor’sshareholders 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 themarket value of our shares on the date issued, with share issue and transaction costs associated with the take over offer, amounting to $1.7million.
  Investec (Mauritius) under various agreements (for more details refer to Item 10C.: “Material Contracts”). We repaid $19.1 million of theshort-term portion of our long-term loans and we drew down $2.8 million from our R100.0 million ($15.9 million) Investec facilityentered into on June 24, 2004.
 Borrowings and funding
  Senior Convertible Notes
  2006, in a private placement to qualified institutional buyers and to non-US persons. As of October 31, 2004, no notes have beenconverted. We issued the notes at a purchase price of 100% of the principal amount thereof. If not converted or previously redeemed, thenotes will be repaid at 102.5% of their principal amount plus accrued interest on the fifth business day following their maturity date inNovember 2006. The notes are convertible into our ordinary shares, or, under certain conditions, ADSs, at a conversion price of $3.75 pershare or ADS, subject to adjustment in certain events. We are entitled to redeem the notes at their accreted value plus accrued interest, ifany, subject to certain prescribed conditions being fulfilled, after November 12, 2005. As of June 30, 2005, the effective interest rate onthe convertible notes was 16.08% per annum and the outstanding balance was $64.9 million. As of October 31, 2005, the effectiveinterest rate on the convertible notes was 16.08% per annum and the outstanding balance was $65.8 million.


106
 Industrial Development Corporation Loan
  expenditures incurred by Blyvoor in completing the Blyvoor expansion project. The loan bears interest at 1% below the prime rate ofFirst National Bank of Southern Africa Limited on overdraft. The loan is repayable in 48 monthly installments. Repayments weresuspended in January 2005 until January 2006. The loan is secured by means of a general notarial bond over the Blyvoor metallurgicalplant.
    on this loan was 9.5%. At October 31, 2005, the outstanding balance was R27.7 million ($4.1 million) with an applicable interest rate of9.5%.
 Investec Bank Limited and Investec Bank (Mauritius) Limited
   at the three-month Johannesburg Inter-bank Acceptance Rate, or JIBAR, plus 300 basis points. As at September 30, 2004, this facilityhad been fully utilized and settled by us issuing 7,850,657 ordinary shares to the value of $15.4 million, based on the market value onthe date of issue. This facility was a general funding facility and was not renewable.
  interest at the three-month JIBAR plus 300 basis points. As at January 11, 2005, this facility had been fully utilized and settled by usissuing 8,700,800 ordinary shares to the value of $15.9 million, based on the market value at the date of issue. This facility was ageneral funding facility and was not renewable.
  (Mauritius) Limited, or Investec (Mauritius). The facility may be used to finance future acquisitions or rights offers by companies inwhich we wish to acquire shares, or with prior written consent of Investec (Mauritius), it may be used for any other purpose. Thefacility bears interest at the three-month London Inter-bank Offered Rate, or LIBOR, plus 300 basis points. Funds advanced andinterest on this facility must be repaid in cash in equal installments every three months from the date of the relevant advance so thatthe amount of the advance is paid in full to Investec (Mauritius) on or before November 12, 2007. The facility is secured by DRD (Isleof Man)’s shares in Emperor Mines Limited, DRD (Porgera) Limited and Tolukuma Gold Mines Limited. The loan agreementprohibits us from disposing of or further encumbering the secured assets. The facility restricts the flow of payments from DRD (Isle ofMan) to the Company through requiring that all net operating cash or cash distributions received by DRD (Isle of Man) in respect ofthe secured assets must be used to first service our interest and principal payment obligations under the facility by requiring that wehold, in a debt servicing account, sufficient cash to cover our quarterly principal payments. Any funds in excess of these repaymentrequirements may be transferred to the Company. Investec (Mauritius) has the option to require DRD (Isle of Man) to pay 50% of anypayments, 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 thefacility. The facility agreement contains a number of additional customary restrictive covenants. At June 30, 2005, $10.0 million hadbeen drawn under this facility. As at October 31, 2005, this amount had been fully settled in cash and $15.0 million was available tobe drawn under this facility.
  interest at the three-month JIBAR plus 300 basis points. As at June 30, 2005, we had drawn down R60.0 million ($9.0 million) underthis facility, and settled this amount by issuing 8,060,647 ordinary shares to the value of $10.0 million, based on the market value atthe date of issue. This facility is a general funding facility and is not renewable. As at October 31, 2005, R40.0 million ($6.0 million)is still available under this facility.
  acquisition facility of $35.0 million was on similar terms as the $15.0 million facility entered into on October 14, 2004, and hassimilar restrictions on the flow of funds and will be settled through the issue of shares. As at June 30, 2005 this facility had not beenutilized. As at October 31, 2005, we had drawn down $10.0 million under this facility, which was partially settled by us issuing5,187,080 ordinary shares to the value of $7.4 million, based on the market value at the date of issue, reducing the amount outstandingat October 31, 2005 to $2.6 million.


107
 Baker Steel Capital Managers LLP
    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 ($13.3million) in accordance with the terms of a separate offering circular to our shareholders. The funds from the claw-back offerwere received on April 12, 2005.
  per share, which was equivalent to the volume weighted average price of our shares on the JSE for the ten trading days immediatelyprior to April 5, 2005. The specific issue shares rank pari passu with our shares already in issue. At a general meeting of ourshareholders held on May 20, 2005, a specific resolution was passed to authorize our directors to allot and issue these shares. Thefunds from the specific issue were received on June 1, 2005.
   Compliance with Loan Covenants
   Anticipated funding requirements and sources
  less current liabilities) of $11.6 million, compared to cash and cash equivalents of $22.5 million and negative working capital of $25.0million at June 30, 2004 and cash and cash equivalents of $44.4 million and positive working capital of $2.4 million at June 30, 2003.At October 31, 2005, our cash and cash equivalents were $25.1 million.
  million, which includes capital expenditure of $15.0 million as discussed above, interest payments on our convertible notes of$4.0 million, the current portion of long-term loans of $5.7 million and working capital of approximately $14.7 million. As at June 30,2005, we expected to finance these commitments from cash resources of $36.1 million at that date, net cash generated by operationsand undrawn borrowing facilities of $11.0 million.
  sufficient to meet our anticipated commitments for fiscal 2006 as described above. In making this statement, management hasassumed that there will be an increase in production from our continuing South African Operations and a decrease in production fromour Australasian Operations, mainly as a result of the cutback of near-surface material in the central part of the West Wall at the PorgeraJoint Venture. Management has assumed a current gold price and exchange rate.
      there is an adverse variation in the price of gold or foreign currency exchange rates in relation to the US Dollar, particularlywith respect to the Rand;
  we default on our borrowing arrangements, including the Investec (Mauritius) facility of $35.0 million or the SeniorConvertible Notes, and we are therefore required to accelerate the repayment of funds;
  Investec (Mauritius) exercises it discretion under the third and fifth Investec (Mauritius) facilities to require us to make aprepayment of 50% of any payments made by the intermediate holding companies of our offshore operations to the Companyusing cash flows generated from our offshore operations; or
  our operating results or financial condition are adversely affected by the uncertainties and variables facing our businessdiscussed under Item 5A in the section entitled “Operating Results” or the risk factors described in Item 3D.: “Risk Factors.”


108
  which would have an adverse impact on our financial position and our ability to continue operating as a going concern. We wouldneed to reassess our operations, consider further restructuring and/or obtain additional debt or equity funding. There can be noassurance that we will obtain this additional or any other funding on acceptable terms or at all.
 5C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
  5D. TREND INFORMATION
  flexibility of the Group. The importance of these operations, in terms of our total production ounces from continuing operations, hasreduced from 79% in fiscal 2003 to 37% in fiscal 2005. We expect that the overall proportion of the Group’s production from ourSouth African Operations will continue to diminish over time.
  strengthening of the Rand, resulting in a lower Rand gold price, and inflationary increases in costs. Accordingly, our South AfricanOperations incurred a net loss after tax, from continuing operations, of $33.5 million in fiscal 2005 and the Group may incur a net lossin fiscal 2006. A net loss after tax of $48.9 million for the six months ended December 31, 2004, compounded by the collective impactof a series of events that culminated in an earthquake, prompted the provisional liquidation of Buffelsfontein Gold Mines Limited, awholly owned subsidiary of the Company and owner of the North West Operations, on March 22, 2005. On June 28, 2004, theCompany entered into a 60-day review period at the Blyvoor Section designed to restore the operation to profitability. The 60-dayreview was extended to September 13, 2004. By October 5, 2004, 1,619 employees were retrenched at a cost of $3.1 million. In aneffort to reduce corporate costs, retrenchments were made at the Company’s corporate head office during fiscal 2005. Theseretrenchment costs amounted to $1.2 million. Whether we will need to engage in any further restructuring, and consequentially incurfurther restructuring costs, depends on several variables which are discussed under Item 5B.: “Liquidity and Capital Resources —
   South African Operations, we would review and consider various alternative approaches for our South African business. We are awarethat currently we would be unable to sell any of our South African Operations, as there are very few buyers interested in marginalSouth African gold mines.
  performance from the South African Operations. For the year ended June 30, 2005, we produced 76,314 ounces from the TolukumaSection and 195,394 ounces from our 20% interest in the Porgera Joint Venture. Production from the Australasian region amounted to63% of total production from continuing operations in 2005.
  growth at existing mines and acquisitions of gold mining operations that meet our strategic criteria. As discussed in Item 3D.: “RiskFactors” there are inherent risks involved in acquisitions. In addition, we would need to find financing for these acquisitions throughadditional borrowings which may not be available on favorable terms, or at all. We could also seek to use our shares as considerationfor acquisitions as we have done in the past, but this will be dependent on market conditions, such as our share price and our ability tosatisfy listing requirements for any such share issues.
 5E. OFF-BALANCE SHEET ITEMS


109
 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
        3
       Total contractual cash obligations
 105,656
 9,952
 69,864
 5,905
 19,935
 5G.
 SAFE HARBOR
  1
 This amount represents the fair value at June 30, 2005, of our obligation under the interest rate swap.
 2
 Represents planned capital expenditure for which contractual obligations exist.
 3
 Operations of gold mining companies are subject to extensive environmental regulations in the various jurisdictions in which they operate. These
 regulations establish certain conditions on the conduct of our operations. Pursuant to environmental regulations, we are also obliged to close ouroperations and reclaim and rehabilitate the lands upon which we have conducted our mining and gold recovery operations. The gross estimated closurecosts at existing operating mines and mines in various stages of closure are reflected in this table. For more information on environmental rehabilitationobligations, see Item 4D.:“Property, Plant and Equipment” and Note 19 “Provision for environmental rehabilitation, reclamation and closure costs” to ourfinancial statements.


110
 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 6A. DIRECTORS AND SENIOR MANAGEMENT
 Directors and Executive Officers
    directors, on a rotating basis, are subject to re-election at each annual general shareholders’ meeting. Additionally, all directors are subjectto re-election at the first annual general meeting following their appointment. Retiring directors normally make themselves available forre-election.
  Executive Directors
 Mark Michael Wellesley-Wood (54)
 Chairman in May 2000 and appointed Chairman and Chief Executive Officer in November 2000. Mr. M.M. Wellesley-Wood wasappointed Executive Chairman on December 19, 2003. In February 2005, Dr Ncholo was appointed as Non-Executive Chairman and Mr.Wellesley-Wood resumed his role as Chief Executive Officer. He holds a degree in Mining Engineering from the Royal School of Mines,Imperial College, London and a Post Graduate Business Studies from London Metropolitan University. He is a Chartered Engineer, aMember of the Institution of Mining and Metallurgy, a former Member of the Stock Exchange in London, a Fellow of the SecuritiesInstitute and a Member of the Society of Investment Professionals. Mr. M.M. Wellesley-Wood has been involved in all aspects of raisingfinance and financial advice for mining companies since 1977. Mr. M.M. Wellesley-Wood is also a director of WCS Limited andEmperor Mines Limited. He was Chairman of the Unwins Wine Group Limited from December 2001 to December 2003. On August 3,2004, he was appointed as the Managing Director of Emperor Mines Limited.
 Ian Louis Murray (39)
 Finance in 1997, alternate director in July 1999, Chief Financial Officer in November 2000 and Deputy Chief Executive Officer inJanuary 2003. Mr. I.L. Murray resigned as Chief Financial Officer in January 2003 but re-assumed that position on June 30, 2003 uponthe resignation of Mr. J.H. Dissel. Mr. I.L. Murray was appointed Chief Executive Officer and Chief Financial Officer on December 19,2003. In January 2005 Mr. I.L. Murray relinquished his position as Chief Financial Officer to Mr. D.N. Campbell and in February 2005relinquished his position as Chief Executive Officer to Mr. M.M. Wellesley-Wood. Mr. I.L. Murray resumed his position as ChiefFinancial Officer upon the resignation of Mr. D.N. Campbell. Mr. I.L. Murray obtained his B.Comm degree from the University of CapeTown and is a member of the South African Institute of Chartered Accountants, and the Chartered Institute of Management Accountants.He also has an Advanced Taxation Certificate from the University of South Africa. Prior to joining us, Mr. I.L. Murray was groupfinancial and administration manager of Bioclones (Pty) Limited, a subsidiary of S A Breweries Limited from August 1995 toJanuary 1997. Mr. I.L. Murray is also a director of Net-Gold Services Limited and G.M. Network Limited (GoldMoney.com) and he wasa director of Emperor Mines Limited, but resigned from this position on October 6, 2005. On September 5, 2005, Mr. I.L. Murrayrelinquished his position as Chief Financial Officer to Mr. J.W.C. Sayers. On November 30, 2005, Mr. I.L. Murray resigned as anExecutive Director.
 John William Cornelius Sayers (59).
 Mr. J.W.C. Sayers has almost 40 years’ financial experience, most recently as Financial Director of Nampak Limited, from 1996 to 2004,and immediately prior to that, as Financial Director of Altron Limited, from 1989 to 1996.


111
 Non-Executive Directors
 Geoffrey Charles Campbell (44).
 Independent Non-Executive Director on December 19, 2003. Mr. G.C. Campbell is a qualified geologist and started his professionalcareer working on gold mines in Wales and Canada. In 1986 he joined Sheppards Stockbrokers in London as a mining analyst. In 1988 hejoined the Australian stockbrokers, Ord Minnett, and spent some time working for its sister company, Fleming Martin, in New York, as asenior research analyst. In 1995 Mr. G.C. Campbell joined Merrill Lynch Investment Managers to run the Gold and General Fund, one ofthe largest gold mining investment funds. He was also Research Director for Merrill Lynch Investment Managers, responsible forcoordinating investment research across the entire group. Mr. G.C. Campbell is currently the managing director of Boatlaunch Limitedand also a director of Oxford Abstracts. Mr. G.C. Campbell was appointed as Non-Executive Chairman with effect from October 25,2005.
 Robert Peter Hume (65).
 years' experience in the auditing field of which the last eighteen years were as a partner in the firm KPMG at its East London office. Sinceretirement in 1999, he spent five years as an investment manager at Sasfin Frankel Pollak in East London. Mr. R.P. Hume is also adirector of King Consolidated Holdings Limited.
 Moltin Paseka Ncholo (42).
 as Non-Executive Chairman in February 2005. Dr. M.P. Ncholo was awarded his doctorate in Philosophy in 1992 and became anadvocate of the High Court of South African in 1994. Prior to becoming the chairman of KBH and ERPM in 1999, he wasdirector-general of the Department of Public Service and Administration. Dr. M.P. Ncholo is also a director of CGR and MvelaphandaResources Limited. Dr. M.P. Ncholo resigned as Non-Executive Chairman with effect from October 25, 2005 and as a Non-ExecutiveDirector on November 1, 2005. Dr. M.P. Ncholo was appointed as Executive Chairman of DRDGOLD South African Operations (Pty)Limited on November 1, 2005.
 Douglas John Meldrum Blackmur (61).
 and as Senior Independent Non-Executive Director on October 25, 2005. Professor D.J.M. Blackmur holds a doctorate in industrialrelations from the University of Queensland and has a career which spans more than 35 years, primarily in management, regulation,industrial relations and universities, including positions held at Shell Australia, the University of Queensland, the Queensland Universityof Technology, the Canberra Institute of Technology, New Zealand Qualifications Authority and the University of the Western Cape. Hecurrently holds the position of Standard Bank Professor of Management at the University of the Western Cape.
 James Turk (58).
 director of G.M. Network Limited (GoldMoney.com), the operator of a digital gold currency payment system. He has specialized ininternational banking, finance and investments since graduating in 1969 from George Washington University with a B.A. degree inInternational Economics. He began his business career with The Chase Manhattan Bank (now J.P. Morgan Chase). In 1980 he joinedRTB, Inc., the private investment and trading company of a prominent precious metals trader. He moved to the United Arab Emirates in1983 to be appointed Manager of the Commodity Department of the Abu Dhabi Investment Authority. In this position he was responsiblefor developing and implementing the investment strategies for the Authority’s portfolio of precious metals. Since resigning from thisposition in 1987, he has written “The Freemarket Gold and Money Report”, an investment newsletter and has been the author of severalbooks on money and banking.
 Senior Management - Corporate
 Craig Clinton Barnes (35)
 2004. A Chartered Accountant, he has a B.Comm degree from the University of the Witwatersrand, and a B.Compt Honors degree andpost graduate diploma in auditing, both from the University of South Africa. Prior to joining the Company, he was Head of FinancialReporting for the Liberty Group.
 Jacob Hendrik Dissel (47
  Ilja David Graulich (33
 Relations in February 2003. Mr. I.D. Graulich is a former financial journalist and has 6 years’ experience across a number of mediasectors including mining editor of a pre-eminent South African financial newspaper. Mr. I.D. Graulich is an alternate director of RandRefinery Limited, G. M. Network Limited (GoldMoney.com) and Net-Gold Services Limited.
 Themba John Gwebu (41)
 as a magistrate prior to joining the Company in April 2004 as Assistant Legal Advisor. He was appointed to his current position ofCompany Secretary in April 2005.


112
 Amanda Roxanne Hoosen (27)
 position in October 2004. She is a graduate in accounting and international business from Drexel University in the United States, and isCertified Public Accountant. She was previously employed in the US by Cox Enterprises Incorporated and Ernst and Young.
 Daniel Johannes Pretorius (38)
 as Group Legal Counsel in February 2004. Mr. D.J. Pretorius is an attorney admitted in the High Court of South Africa, and has 12 years’legal experience in the mining industry, 9 years of which were in private practice. Mr. D.J. Pretorius is a director of Rand RefineryLimited.
 Andrew Norman Weir (41)
 advanced labor law. Mr. A.N. Weir was appointed General Manager Human Resources in April 2005 and has 17 years’ experience in themining industry.
 Senior Management – South Africa
 William Thomas Beer (53)
 Manager Assets and Commercial in April 2005. Appointed Chief Administration Officer in January 2002, he has 23 years’ managementexperience.
 Manual Jorge Monteiro Da Silva (35)
 from the University of the Witwatersrand and obtained his Mine Manager’s Certificate in 1995. He joined the Company as ProductionManager at Blyvoor in 2002 and was appointed to his current position in August 2005. He has 13 years’ experience in the miningindustry.
 Kevin Peter Kruger (37)
 mechanical engineering from the University of the Witwatersrand, and joined the Company in 1994. Previously Engineering Manager atthe Company’s North West Operations, he was appointed to his current position in April 2005.
 Louis Charles Lamsley (57)
 and Mine Manager’s Certificate of Competency, was appointed Regional general Manager in April 2005. He has 32 years’ experience inthe gold mining industry, 25 years of which have been spent in management.
 Mark Craig Munroe (37)
 General Manager at Blyvoor in September 2004. Previously, 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’sCertificate of Competency in 1999. He has 19 years’ experience in the mining industry.
 Charles Methley Symons (51)
 position in 1997. He holds a Masters degree in Business Leadership and a B.Comm degree from the University of South Africa, and aNational Diploma in Extractive Metallurgy.
 David Edwin Whittaker (49)
 position in April 2005. He has a BSc Honors degree from Luton College of Higher Education, a diploma in mining engineering from theCamborne School of Mines and a graduate diploma in engineering from the University of the Witwatersrand. He has 23 years’ experiencein the mining industry.
 Senior Management- Australasia
 Fergus Hart (43)
 position in July 2005. Previously, he was at Emperor Mines Limited in Fiji for four years. He has some 20 years’ gold mining experience,obtained primarily in South Africa in both operational and project roles with the Gencor, Goldfields and Harmony groups.
 Richard Lewis Johnson (53)
 February 2003. Mr. R.L. Johnson has a BSc degree in mining engineering. Mr. R.L. Johnson was appointed as a Non-Executive Directorof Emperor Mines Limited in August 2004.
 Willie Andre Labuschagne (38)
 experience in financial and general management in the mining sector. He joined the Company in 2002 and moved to Brisbane in February2004 to establish a regional office there.


113
 Terry Sean O’Connor (54)
 graduate from the University of South Africa, he holds a National Higher Diploma in Metalliferous Mining and South African MineManager’s Certificate. He was previously a mine manager with Anglo Platinum.
 Sandra Christine Spencer (40)
 Manager Human Resources in Australasia. She has more than 16 years’ professional human resources experience in the finance,management consultancy and IT sectors. She has a Certificate in Personnel Practice.
 Michael Patrick Marriott (49)
 Metalliferous Mining and a South African Mine Manager’s Certificate of Competency, was appointed as General Manager Projects inMarch 2004, and as Divisional Director SA Operations in August 2004. He became Chief Operating Officer in Australasia in June 2005.He has 31 years’ experience in the gold mining industry, including positions held at Anglo American Gold Division, Cluff Resources,Ashanti Goldfields Zimbabwe, Independence Gold Mining Zimbabwe and Highland African Mining Company Limited.Mr. M.P. Marriott is a director of Emperor Mines Limited.
 Changes in our Board of Directors and Executive Officers
  Appointments
 Title
 Date
                   Resignations
 Title
 Date
           Divisional Director Growth and Technical Services andAlternate Director
      Divisional Director South African Operations and AlternateDirector
        Directors' Terms of Service
   Director
 Title
 Year firstAppointed
 Term of
 current
 office
                                 * Reappointed in 2005# Resigned October 25, 2005## Resigned November 30, 2005
  understandings between any of our directors or executive officers and any other person by which any of our directors or executive officershave been so elected or appointed.


114
 6B. COMPENSATION
 Our Articles of Association provide that the directors' fees should be determined from time to time in a general meeting or by a
 quorum of Non-Executive Directors. The total amount of directors' remuneration paid for the year ended June 30, 2005 was R17.2 million($2.8 million). Non-Executive Directors receive a basic fee of $20,000 per annum, subcommittee fees of $2,000 per annum for eachsubcommittee of which they are a member and $4,000 per annum for each subcommittee of which they are chairperson. During the yearended June 30, 2005, we contributed R0.5 million ($0.1 million) to our defined contribution plans for our officers and directors.
 The following table sets forth the compensation for our directors for the year ended June 30, 2005:
 Directors
 Basic
 salary/fees
 ($'000)
 Change in terms of
 employment
 payment
 ($'000)
 Retirement fund
 contributions/
 bonus/restraint of
 trade/expenses
 ($'000)
 Total
 ($'000)
 Share option
 scheme gains
 ($'000)
 ExecutiveM.M. Wellesley-Wood
 1
        2
   3
          --
  4
        5
       Subtotal
 1,369
 250
 887
 2,506
 14
 Non-ExecutiveM.P. Ncholo
 6
                    7
       D.J.M. Blackmur..................................................J Turk
 8
 ..................................................................
 3318
 --
   4818
 --
 Subtotal
 186
 -
 73
 259
 -
 Total
 1,555
 250
 960
 2,765
 14
 Refer to Item 6E “Share Ownership” for details of share options held by directors.
 1
  of employment payment by virtue of his relinquishing the post of Chief Executive Officer of the Company, equal to 92% of his South Africanremuneration package calculated on the basis of the remuneration package received on December 1, 2003. This payment accrued during May 2004,but was deferred for six months, at Mr. M.M. Wellesley-Wood’s request. The role of Chairman and Chief Executive Officer was split in accordancewith the rules prescribed by the JSE Limited, which came into effect from January 1, 2004 and not as a result of any internal operating requirementof the Company. No other payment of this nature was made to any officer of the Company in fiscal 2004. The Remuneration and NominationsCommittee approved the payment which amounted to R1.7 million ($0.3 million) plus interest of R0.1 million ($0.02 million).
 2
  of employment payment by virtue of his relinquishing the post of Chief Financial Officer. Mr. I.L. Murray was previously the Deputy ChiefExecutive Officer and Chief Financial Officer until December 2003 at which time the role of Chairman and Chief Executive Officer were split andMr. M.M. Wellesley-Wood was appointed as Executive Chairman and Mr. I.L. Murray was appointed as Chief Executive Officer and Chief FinancialOfficer. By virtue of him relinquishing the post of Chief Financial Officer and appointing a replacement Chief Financial Officer, he became entitledto an amount equal to 93% of his South African remuneration package calculated on the basis of the remuneration package received on December 1,2003. Such payment amounted to R1.1 million ($0.2 million) plus interest of R0.3 million ($0.05 million) and was approved by the Remunerationand Nominations Committee which approved the agreement of employment. Mr. I.L. Murray resigned as an Executive Director with effect fromNovember 30, 2005.
 3
  4
  5
  6
  7
  8


115
 Compensation of senior management
  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 ExecutiveDirectors, in fiscal 2005 was  $1.8
  director meet all the targets set in terms of such predetermined key performance indicators, he will be entitled to a bonus of 40% or 50%of his remuneration package, depending on his particular agreement. Should an Executive Director not meet all the targets set in terms ofthe predetermined key performance indicators, he will be entitled to a lesser bonus as determined by the Remuneration and NominationsCommittee.
 Service Agreements
    employment with us and DRD (Isle of Man) Limited, or DRD (Isle of Man), on May 7, 2004. These agreements regulate theemployment relationship with Messrs. M.M. Wellesley-Wood and I.L. Murray for the period that commenced on December 1, 2003and ending on November 30, 2005. Separate agreements of employment were entered into with us and DRD (Isle of Man) to reflectthe proportionate distribution of time and effort which they apply between our South African and Australasian operations. Mr. J.W.C.Sayers entered into an agreement of employment with the Company for the period that commenced on September 5, 2005 and endingSeptember 4, 2007.
  DRD (Isle of Man) $250,000 per annum (payable in pounds sterling in accordance with the exchange rate in effect on December 1,2003, in an amount of £145,000 per annum). He is also eligible, under both agreements, to receive an incentive bonus of up to 40% ofhis annual remuneration package in respect of each of four bonus cycles of 6 months each, over the duration of his appointment, oncondition that he achieves certain agreed key performance indicators. Mr. M.M. Wellesley-Wood’s agreements also provide that hewill receive a total of up to 460,000 of our ordinary shares in four equal tranches at intervals of 12 months over the duration of hisagreements of employment and beyond. In terms of a JSE listing requirement, these allotments were subject to approval byshareholders. We have since decided, and Mr. M.M. Wellesley-Wood has agreed, that we will not seek the consent of our shareholdersand that he will not be issued these shares. An alternate means of achieving the objective of the retention incentive has beenimplemented through the payment of a bonus. Mr. M.M. Wellesley-Wood became entitled to an amount equal to 92% of hisremuneration package from us, by virtue of his relinquishing the position of Chief Executive Officer and Deputy Chairman of theCompany.
  Man) $200,000 per annum. Mr. I.L. Murray is eligible, under both agreements, for an incentive bonus in respect of up to 50% of hisannual remuneration package in respect of each of four bonus cycles of 6 months each over the duration of his appointment, oncondition that he achieves certain key performance indicators. Mr. I.L. Murray’s agreements also provide that he will receive a total ofup to 366,000 of our ordinary shares in four equal tranches at intervals of 12 months over the duration of his agreements ofemployment and beyond. In terms of a JSE listing requirement these allotments were subject to approval by shareholders. We havesince decided, and Mr. I.L. Murray has agreed, that we will not seek the consent of our shareholders and that he will not be issuedthese shares. An alternate means of achieving the objective of the retention incentive has been implemented through the payment of abonus. Our agreement further provides that Mr. I.L. Murray became entitled to an amount equal to 93% of his South Africanremuneration package calculated on the basis of the remuneration package as determined on December 1, 2003, by virtue of hisrelinquishing the position as Chief Financial Officer.
  remuneration package of R2.0 million ($0.3 million) per annum. Mr. J.W.C. Sayers is eligible under his employment agreement, foran incentive bonus of up to 50% of his annual remuneration package in respect of each of four bonus cycles of 6 months each over theduration his appointment, on condition that he achieves certain key performance indicators.


116
  terminated by us, or DRD (Isle of Man) in the case of our executive officers, except where terminated as a result of certain action on thepart 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. Atermination of a director's employment upon the occurrence of a change of control of us is referred to as an “eligible termination.” Uponan 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 yearssalary or fees, depending on the period of time that the director has been employed. Upon an eligible termination, all options held by thedirector under our share option scheme become exercisable by the director at any time prior to the closing of the transaction involving achange of control or, in certain circumstances in the case of executive directors, during the thirty day period following the closing of sucha transaction. Additionally, upon an eligible termination, the executive directors become entitled to any of the shares granted to suchexecutive 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 inthe event that the agreement automatically terminates and is not extended or replaced by another agreement with the executive director.
  fixed periods until February 13, 2007, October 31, 2007, September 30, 2006, October 31, 2007 and October 31, 2006, respectively.Mr. D.C. Baker resigned from our board of directors on October 27, 2004, and his service agreement was terminated. Dr. M.P. Ncholoresigned from our board of directors on November 1, 2005, and his service agreement was terminated. After their respective two andthree year periods, the agreements continue indefinitely until terminated by either party on not less than three months prior written notice.
 6C. BOARD PRACTICE
 Board of Directors
  I.L. Murray and J.W.C. Sayers) and five Non-Executive Directors (Messrs. G.C. Campbell, D.J.M. Blackmur, R.P. Hume,M.P. Ncholo and J. Turk). The Non-Executive Directors are independent under the Nasdaq requirements and the South African KingII Report, with the exception of Dr. M.P. Ncholo, by virtue of his shareholding in KBH, the 60% shareholder of CGR, and Mr. J.Turk, by virtue of his directorship of G.M. Network Limited (GoldMoney.com), the holding company of Net-Gold Services Limitedin which we have a 50.25% interest.
  with the South African Combined Code, the responsibilities of Chairman and Chief Executive Officer were separated during January2004. Dr M.P. Ncholo is now the Non-Executive Chairman, Mr. M.M. Wellesley-Wood is now the Chief Executive Officer and Mr.J.W.C. Sayers is appointed as Chief Financial Officer. Mr. I.L. Murray has taken up the position of Corporate Development Officer. InDecember 2004, Mr. G.C. Campbell was appointed senior independent Non-Executive Director. In future, the evaluation of theChairman’s performance will be considered by the Non-Executive Directors led by the senior independent Non-Executive Director.Mr. D.C. Baker resigned from our board of directors on October 27, 2004, and Mr. J. Turk a Non-Executive Director was appointed onOctober 27, 2004. Mr. D.T. van der Mescht, an alternate director, resigned on August 5, 2004 and Mr. A. Lubbe, an alternate director,resigned on March 30, 2005, and no replacements have been appointed as yet. 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 ofthe board. A prospective candidate would be invited to attend a meeting and be interviewed before any decision is taken. Incompliance with the Nasdaq rules a majority of independent directors will select or recommend director nominees.
  strategic objectives and to ensure that the necessary financial and other resources are made available to the management to enablethem to meet those objectives. The board retains full and effective control over the Company, meeting on a quarterly basis withadditional ad hoc meetings being arranged when necessary, to review strategy and planning and operational and financialperformance. The board further authorizes acquisitions and disposals, major capital expenditure, stakeholder communication andother material matters reserved for its consideration and decision under its terms of reference. The board also approves the annualbudgets for the various operational units.
  decisions on material matters are referred to the board. The board approves all the terms of reference for the various subcommittees ofthe 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.


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  meetings with senior management, presentations by the Company’s advisors and site visits. The directors are assessed annually, bothindividually and as a board, as part of an evaluation process, which is driven by an independent consultant.  Remuneration and Nominations Committee formally evaluates the executive directors and the alternate directors on an annual basis,based on objective criteria.
  by shareholders. In addition, all directors are subject to re-election by shareholders at the first annual general meeting following theirappointment. 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 enableshareholders to make an informed decision in respect of their re-election.
  compliance with procedures and regulations of a statutory nature. Directors are entitled to seek independent professional adviceconcerning the affairs of the Company at the Company’s expense, should they believe that course of action would be in the bestinterest of the Company.
  that this interferes with their independence. See Item 6A.: “Directors, Senior Management and Employees” and Item 6E.: “Shareownership”.
  meetings, which are scheduled over 2 or 3 days, allows adequate time for the Non-Executive Directors to interact without the presenceof the executive directors. The board meetings include the meeting of the Risk Committee, Audit Committee and Remuneration andNominations Committee which act as subcommittees to the main Board. Each subcommittee is chaired by one of the IndependentNon-Executive Directors who provide a formal report back to the main Board, as part of the quarterly reporting process. Eachsubcommittee meets for approximately half a day. Certain senior members of staff are invited to attend the subcommittee meetings.
  Ethics and Conduct, a copy of which is available on our website at www.drdgold.com. The Code of Ethics and Conduct applies to alldirectors, officers and employees, including the principal executive, financial and accounting officers, in accordance with Section 406of the US Sarbanes-Oxley Act of 2002, the related US securities laws and the Nasdaq rules. The Code contains provisions underwhich employees can report violations of Company policy or any applicable law, rule or regulation, including US securities laws.
  of Man. This board comprises of three Non-Executive Directors, Mr. M.G. Gisborne, Mr. P.F. Matthews and Mr. G.C. Campbell.Mr. M.M. Wellesley-Wood is an executive director, with Mr. J.W.C. Sayers acting as his alternate.
 Board Committees
  and to effectively fulfill its decision-making process. Each committee acts within written terms of reference which have beenapproved by the Board and under which specific functions of the board are delegated. The terms of reference for all committees can beobtained by application to the Company Secretary at the Company’s registered office. Each committee has defined purposes,membership requirements, duties and reporting procedures.  members of the committees and made available to the board. Remuneration for Non-Executive Directors for their services on thecommittees 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 performance andeffectiveness.
  Executive Committees
  Committee for the South African operations. As at June 30, 2005, the Australasian Executive Committees consisted of Mr. M.M.Wellesley-Wood (Chairman), Mr. I.L. Murray, Mr. J.W.C. Sayers, Mr. T.S. O’Connor, Mr. F. Hart, Mr. R.L. Johnson, Mr. M.P. Marriott,Mr. W.A. Labuschagne and Ms. S.C. Spencer. The South African operations Executive Committee consisted of Mr. M.M. Wellesley-Wood (Chairman), Mr. I.L. Murray, Mr. W.T. Beer, Mr. J.H. Dissel, Mr. L.C. Lamsley, Mr. D.J. Pretorius, Mr. J.W.C. Sayers, Mr. A.N.Weir and Mr. I.D. Graulich.


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  for consideration by the Board of Directors, implement its directives and consider disclosure controls and procedures. Members of theExecutive Committees, who are unable to attend the meetings in person, are able to participate via teleconference facilities, to allowparticipation in the discussion and conclusions reached.
 Committees of the Board of Directors
 Remuneration and Nominations Committee
   board of directors. The committee meets quarterly, but may meet more often on an ad hoc basis if required. The Remuneration andNominations Committee is governed by its terms of reference and is responsible for approving the remuneration policies of theCompany, the terms and conditions of employment, and the eligibility and performance measures of the DRDGOLD (1996) ShareOption Scheme applicable to directors and senior management.
  executives of the highest caliber and encourage and reward superior performance. The committee also aims to ensure that criteria arein place to measure individual performance. The committee approves the performance-based bonuses of the executive directors basedon such criteria. The General Manager Human Resources provides the committee with access to comparative industry surveys, whichassist in formulating remuneration policies. As and when required the committee may also engage the services of independentconsultants to evaluate and review remuneration policies and related issues and brief members on pertinent issues. The committee hasin the past year engaged the services of such consultants to review the employment contracts of the executive directors.
          Long-term retention of key employees based on scarcity of skill and strategic value, using share options granted under theDRDGOLD (1996) Share Option Scheme or shares for the Executive Directors.
  Audit and Risk Committee
  up of the Audit and Risk sections. The two sections sit together one after the other (chaired by their respective Chairmen) and engagein joint deliberations. The Audit section is chaired by Mr. R.P. Hume and the Risk section is chaired by Professor D.J.M. Blackmur.The reason for the merger is that there was a great deal of overlap between the financial risks discussed at Audit Committee level andat Risk Committee level. The Company believes that the merging of these committees will provide better disclosure and aligns theCompany with the US Sarbanes-Oxley Act of 2002 process. For the sake of convenience the Audit Section of the Committee will bereferred to as the Audit Committee and the Risk Section as Risk Committee in this part of the report.Audit section of the Audit and Risk Committee
   
 responsibilities of the Audit Committee, as set out in the Audit Committee charter, is to assist the board in carrying out its dutiesrelating to accounting policies, internal financial control, financial reporting practices and the preparation of accurate financialreporting and financial statements in compliance with all applicable legal requirements and accounting standards. A copy of thecharter is available by application to the Company Secretary at the Company’s registered office.


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  Financial Officer and the Internal Audit and Compliance Manager to review the audit plans of the internal auditors, to ascertain theextent to which the scope of the internal audits can be relied upon to detect weaknesses in the internal controls and to review theannual and interim financial statements prior to approval by the board. The Audit Committee reviews our annual results, theeffectiveness of our system of internal financial controls, internal audit procedures and legal and regulatory compliance. The committeealso reviews the scope of work carried out by our internal auditors and holds regular discussions with the external auditors and internalauditors.
  engagement of the external auditors. The committee is required to pre-approve, and has pre-approved, non-audit services provided byour external auditors. The Company’s external audit function is currently being undertaken by KPMG Inc.
  necessary, to the Chairman of the board and Chief Executive Officer. All important findings arising from audit procedures arebrought to the attention of the committee and, if necessary, to the board.
 Risk section of the Audit and Risk Committee
    Board in its duties relating to risk management and control responsibilities, assurance issues, health, safety and environmentalcompliance, 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 RiskCommittee can be obtained by application to the Company Secretary at the Company’s registered office.
 The Risk Committee’s role is to ensure that:•
                 required. Certain members of executive management are invited to attend Risk Committee meetings on a regular basis, such as theChief Financial Officer, Internal Audit and Compliance Manager, the Group Risk Manager, the Group Financial Manager, theOperational Managers, the Group Legal Counsel, the manager responsible for safety, health and environment and the GeneralManager Assets and Commercial.
    business objectives and undermine the preservation of shareholders values. The significant risks facing the Group including those atoperations have been identified and have been included in Item 3D.: “Risk factors.” Individuals have been appointed to address eachrisk and the results thereof, are reviewed by senior management through regular risk meetings. The aim of the internal controlsystems is for management to provide reasonable assurance that the objectives will be met. In addition to the above initiatives theGroup also employs third party consultants to benchmark our operations against other mining operations throughout South Africa andmore than 300 different mining companies worldwide.


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  disaster. We have embarked on a program to ensure that our major assets and potential business interruption and liability claims arecovered by group insurance policies that encompass our operations world-wide. The majority of the cover is through reputableinsurance companies in London and Europe and the insurance programs are renewed on an annual basis. Insurance premiums for theGroup have been reduced by more than 30% in fiscal 2004, due to the risk initiatives undertaken in the Group. A cell captive has beenestablished to enable further reduction in annual insurance premiums. An insurance company, Fortis Limited, has been established toprovide workers compensation insurance to the Tolukuma Section in Papua New Guinea.
 6D. EMPLOYEES
 Employees
   Year ended June 30
 2005
 2004
 2003
              employed by us and our wholly-owned Group companies. As of October 31, 2005, we had 4,324 employees. The decrease in the numberof employees in fiscal 2005 is due to the provisional liquidation of the North West Operations which included 7,614 employees in March2005. The decrease in the number of employees in fiscal 2004, was due to the restructuring at the North West Operations which includedthe retrenchment of approximately 2,200 employees in September 2003 and 1,000 employees in April 2004, and the reduction ofcontractors.
   Year ended June 30,
 Category of Activity
 2005
 2004
 2003
                                             Labor Relations
  70% of South African employees are members of trade unions or employee associations. This excludes all employees of the CrownSection and ERPM Section, and all employees from our 20% interest in the Porgera Joint Venture and our 45.33% interest in the EmperorSection. There were no material incidents of industrial action or labor unrest at our operations during fiscal 2005.
  place in the country have reduced the impact of organized labor on political transformation. The National Union of Mineworkers, orNUM, 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 ofCOSATU. The relationship between management and labor unions remains cordial. The DRDGOLD/National Union of Mineworkers co-coordinating forum meets regularly to discuss matters pertinent to both parties at Group level, while operations level forums continue todeal with local matters. The wage agreements for the period 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 recognizedunions and associations.


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  operations, a severance package of not less than one week’s remuneration for every completed year of service. In the aforementionedagreements with organized labor we undertook, as in the past, to pay packages equal to two weeks basic pay for every completed yearof service as part of a balancing compromise with the labor unions between the high additional costs of non-financial items andincentive payments (which are deemed part of remuneration), and an additional one week benefit based on basic pay.
  surrounding communities are maintained by way of worker consultative committees and a community forum lead by the CommunityRelations Manager.
  productivity and increased medical costs. The exact extent of infection in our workforce is not known at present, although it is roughlyestimated by the industry that the prevalence of HIV, the virus that causes AIDS, in the South African industry is currently approximately30% to 40%. We have several AIDS awareness campaigns in place at our operations.
   Safety statistics
  following overall statistics for our managed mines (including the Crown and ERPM Sections, but excluding Porgera and Emperor MinesLimited) are reflected below.
 (Per million man hours)
 Year ended June 30,
 2005
 2004
  1
     1
          1
 Calculated as follows: Actual number of instances divided by the total number of man hours worked multiplied by one million.


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 6E. SHARE OWNERSHIP
 As of October 31, 2005, options to purchase ordinary shares held by directors were as follows:
 Directors
 Options at
 June 30,
 2004
 Optionsgranted
 during the
 period
 AverageExercise
 price (R)
 Options
 exercised
 during the
 year
 AverageExercise
 Price (R)
 Options
 lapsed
 during the
 year
 Options at
 Oct 31,
 2005
 ExpirationDates
 1
 Executive
            2
           Alternate Directors
  3
            4
           Non-Executive
  5
                                6
           Each option is representative of a right to acquire one ordinary share at a predetermined exercise price.
 Closed periods apply to share trading by directors and other employees, whenever certain employees of the Company become
 or could potentially become aware of material price sensitive information, such as information relating to an acquisition, quarterlyresults etc., which is not in the public domain. When these employees have access to this information an embargo is placed on sharetrading for those individuals concerned. The embargo need not involve the entire Company in the case of an acquisition and mayapply only to the board of directors, executive committee, and the financial and new business teams, but in the case of quarterly resultsthe embargo is group-wide.
 Under the listings requirements of the JSE, we are not required to disclose, and we do not otherwise disclose or ascertain, share
 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 1percent of the Company’s issued ordinary share capital. For details of share ownership of directors see Item 7A.: “Major Shareholders.”
 1
   2
  3
   4
   5
  6


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 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, amaximum of 15% of the issued ordinary shares is reserved for issuance thereunder and no participant may hold options at any time, whichif exercised in full, would exceed 2% of our issued share capital at that time. As at October 31, 2005, the number of issued andexercisable share options is approximately 4.4% of the issued ordinary share capital, which is within the National Association ofPension Funds (United Kingdom) international accepted guideline of 3 to 5% for such schemes. In addition, the participants in theScheme 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 theoption. Each option remains in force for ten years after the date of grant, subject to the terms of the option plan. Options granted under theplan 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
            6,507,374 ordinary shares were currently exercisable. In fiscal 2005, a total of 125 employees participated in the Scheme includingExecutive Directors, Non-Executive Directors and other senior employees. The outstanding options are exercisable at purchase prices thatrange from R3.11 to R36.08 per share and expire ten years from the date of issue to the participants.


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 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 7A. MAJOR SHAREHOLDERS
          there were 6,185 record holders of our ordinary shares in South Africa, who held approximately 9,826,233 or approximately3.2% 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 cumulativepreference shares;
      there were 3,501 record holders of our ADSs in the United States, who held approximately 243,467,791or approximately79.61% of our ordinary shares.
     any person whom the directors are aware of as at October 31, 2005 who is interested directly or indirectly in 5% or more of ourordinary shares.
 Shares Beneficially Owned
 Holder
 Number
 Percent
               Bank of New York ADRs101 Barclay StreetNew York, NY 10011
   * Indicates share ownership of less than 1% of our outstanding ordinary shares.


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  with respect to securities. Ordinary shares issuable pursuant to options, to the extent the options are currently exercisable or convertiblewithin 60 days of October 31, 2005, are treated as outstanding for computing the percentage of any other person. As of October 31, 2005,we are not aware of anyone owning 5% or more of our ordinary shares other than the Bank of New York which holds 79.61% of ourissued ordinary shares through our ADR program. Unless otherwise noted, each person or group identified possesses sole voting andinvestment power with respect to the shares, subject to community property laws where applicable. Unless indicated otherwise, thebusiness address of the beneficial owner is: DRDGOLD Limited, EBSCO House 4, 299 Pendoring Avenue, Blackheath, Randburg, SouthAfrica.
 Cumulative Preference Shares
    six months. The terms of issue of the cumulative preference shares are that they carry the right, in priority to the Company's ordinaryshares, to receive a dividend equal to 3% of the gross future revenue generated by the exploitation or the disposal of the Argonaut mineralrights acquired from Randgold & Exploration Company Limited in September 1997. They will obtain their potential voting rights onlyonce the Argonaut Project becomes an operational gold mine, and dividends accrue to them. Additionally, holders of cumulativepreference shares may vote on resolutions which adversely affect their interests and on the disposal of all or substantially all of our assetsor mineral rights. There is currently no active trading market for our cumulative preference shares. No shareholder has voting rightswhich differ from the voting rights of any other shareholder. On May 1, 2005, the Argonaut mineral rights reverted to the South AfricanState, in terms of the MPRD Act. An application to be issued with prospecting rights in respect of our former holdings is currentlypending before the Department of Minerals and Energy. If we do not acquire new rights under the MPRD Act, we would be entitled toclaim compensation from the South African Government if we can prove that thereby our property has been expropriated as provided forunder the Constitution of South Africa. Whether mineral rights constitute property and whether the MPRD Act does bring about anexpropriation, are both aspects which are the subject of legal debate which is likely to be settled ultimately by litigation. The factors indetermining compensation include not only fair market value but also history of acquisition and use and aspects of redress and reformwhich could have the effect of reducing the compensation.
 7B. RELATED PARTY TRANSACTIONS
 Rand Refinery Agreement
  gold produced in South Africa. Under the agreement, RRL performs the final refining of our gold and casts it into troy ounce bars. RRLthen 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 thisservice, we pay RRL a variable refining fee plus fixed marketing, loan and administration fees. For fiscal 2005 this amounted to $0.4million and $0.9 million for fiscal 2004. Mr. D.J. Pretorius, our Legal Advisor, is also a director of RRL and has been appointed as amember of their audit committee. Also, Mr. I.D. Graulich, our General Manager: Investor Relations, 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 RRLdecreased to our current ownership of 3%. RRL is jointly owned by South African gold mining companies.
 R.A.R. Kebble
  with us with effect from March 19, 2002 and ceased to be a director of our board with effect from June 30, 2002. Pursuant to thatagreement we undertook to pay an amount of R3.1 million ($0.3 million) to Mr. R.A.R. Kebble on June 30, 2002. We believe that we arenot required to pay this amount and we have not done so. One of the reasons for this is that we believe we have a counterclaim againstMr. R.A.R. Kebble in excess of this claim.
 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 fundswere used for short-term working capital advances. As at October 31, 2005, the full balance was still outstanding.


126
 iProp Loan Note
  amount of R37.7 million ($3.6 million) is recorded as owing by CGR to us. At the time, CGR was an indirect wholly-owned subsidiary ofCrown Consolidated Gold Recoveries (Pty) Limited, or CCGR. We sold 60% of our interest in CGR to Khumo Bathong Holdings (Pty)Limited, or KBH. This amount was originally owed by CGR to iProp Ltd (previously known as RMP Properties SA Limited), or iProp, interms of a secured loan note. In an arrangement in which JCI Gold Limited, or JCI, paid iProp R38.0 million ($3.7 million) in exchangefor 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 restatedin terms of the loan agreement entered into on June 12, 2002. The total amount outstanding on this loan as of October 31, 2005, isR54.2 million ($8.1 million). The loan bears interest at the prime rate of The Standard Bank of South Africa Limited. As of June 30,2005, the interest rate was 10.5% per annum and as of October 31, 2005, the interest rate on this loan stood at 10.5%. The loan isrepayable on demand within seven years. During fiscal 2005 we agreed to suspend our right to demand repayment of this balanceindefinitely. Interest is payable annually in arrears. The loan is unsecured. In terms of the loan agreement the principal amount will berepaid in equal annual installments. As at October 31, 2005, this balance was still owing to us, however, we have recognized lossesgenerated by CGR and its subsidiary against this loan and it is carried at a nil value.
 Crown Gold Recoveries (Pty) Ltd, or CGR
  agreement entered into on June 12, 2002. Prior to this, CGR was an indirect wholly-owned subsidiary of ours. The loan bears interest atthe prime rate of The Standard Bank of South Africa Limited. As of October 31, 2005, the outstanding balance was R7.9 million($1.2 million). The loan is repayable on demand within five years from such a demand having been made. During fiscal 2005 we reachedan agreement with CGR that we would suspend our right to demand repayment of this balance indefinitely, due to the loss makingposition of CGR. Interest is payable annually in arrears. The loan was secured by KBH's pledge to us of 49,928,824 shares in ERPM.However, since the acquisition of ERPM by CGR, the loan is no longer secured. The strategic value of this transaction was that it hasenabled us to introduce a black empowerment entity, KBH, which is necessary in terms of the new Mining Charter.
  second being for R37.7 million ($3.6 million). The first loan is payable on demand within three years from such a demand having beenmade and interest is payable annually in arrears and the second loan is payable on demand within seven years from such a demand havingbeen made and interest is payable annually in arrears. During fiscal 2005 we reached an agreement with and CGR that we would suspendour right to demand repayment of this balance indefinitely, due to the loss making position of CGR. The total amount outstanding onthese loans, as at October 31, 2005, is R54.8 million ($8.2 million), however, we have recognized losses generated by CGR and itssubsidiary against this loan and it is carried at a nil value.
  and CGR. This agreement provides that the board of CGR shall comprise two directors appointed by CCGR and three directors appointedby KBH. The agreement also provides that certain business matters such as amending the memorandum and articles of association ofCGR, canceling the services agreement with us or incurring certain indebtedness requires the approval of CCGR, in the case ofshareholder matters, or a director appointed by CCGR in the case of directors matters. Additionally, the agreement places restrictions onour ability to dispose of shares of CGR without the prior written consent of the other shareholders. The shareholder agreement alsoprovides that unless its board of directors determines otherwise, CGR shall declare an annual dividend of a minimum of 30% of the netprofits of CGR after taxes and interest. As of October 31, 2005, no dividends have been declared.
  ($30.3 million). Under the terms of the share purchase agreement, 57% (R108.0 million ($17.2 million)) of the principal amount of theseloans were sold to IDC and 3% (R5.7 million ($0.9 million)) to KBH. However, upon KBH exercising its option to purchase IDC'sinterest in CGR, IDC's portion of this loan was ceded to KBH. These balances are still outstanding as at October 31, 2005, however, wehave recognized losses generated by CGR and its subsidiaries against this loan and it is carried at a nil value.
    as of October 31, 2005, stood at 10.5%. It is the intention of the parties to amend the terms of the shareholders' loans. It is expected thatthe shareholders' loans will continue to bear interest at the prime rate and the interest will be repayable in equal monthly payments overthe period of the loans.


127
  KBH were subject to a put and call option instrument between KBH and Investec, with the shares held as security. The option wasexercised 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 collectivelythe Sellers, and CGR, entered into an agreement in terms of which CGR agreed to purchase from the Sellers the entire issued share capitaland shareholders' claims of ERPM. Dr. M.P. Ncholo is one of our non-executive directors and we own a 40% interest in CGR. Thepurchase price for the acquisition of the shares and the claims was R100.0 million ($9.5 million). CGR loaned an amount ofR60.0 million ($5.7 million) to the Sellers as an interest free loan, and CGR received from the Sellers, as security for the loan, a pledge ofthe entire issued share capital of ERPM and a cession of the Sellers' claims to CGR. The conditions of the sale were fulfilled and theamount was deemed to be paid to the Sellers on account of the purchase price. An existing mortgage bond registered by ERPM in favorof Courthiel Holdings (Pty) Ltd securing shareholder loans in the sum of R10.0 million ($1.9 million) was also ceded to CGR as securityon October 11, 2002. The full amount is still owing under the bond.
  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 40% shareholder in CGR, agreed to use its best endeavors to obtain a loan of R40.0 million ($3.8 million) from the IDC which was paidto the Sellers as final part payment of the purchase price of the ERPM acquisition. CGR procured the release of the Sellers from allstatutory environmental obligations, including obligations to furnish guarantees and the like to the Department of Minerals and Energy, orDME, and ERPM will assume the Sellers' responsibilities in this regard. CGR acquired ERPM as is, without indemnification for anydisclosed or undisclosed liabilities, which could require CGR to incur significant financial obligations to satisfy any liability.
  R10.0 million ($1.6 million) to ERPM. The loan bears interest at the prime rate charged by The Standard Bank of South Africa Limitedon overdraft and as of October 31, 2005, the interest rate on the loan stood at 10.5%. The loan is secured by a pledge of certain movableassets of ERPM.
  respectively, on the same terms. These amounts were advanced for ERPM acquisition costs and working capital requirementsrespectively.
  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 fundinfrastructure upgrades and the purchase of mining equipment. The loan facility is repayable in equal installments over the 5 years, andbears interest at prime less 0.5%. The debentures are repayable in 78 months from issue date and bear interest at prime less 2.5%. Inaddition the debentures attract a royalty of 0.267% of the gross revenue received from net smelter revenue.
  expansion and underground resource development plan at ERPM was abandoned. All project finance loans advanced to CGR andERPM, and included above, totaling $8.8 million were included in the investment in our associate, against which losses recorded by theassociate, were recognized against these advances in fiscal 2004. In fiscal 2005, no further advances were made. No repayment has beenreceived on either the loan or the debentures and management have agreed to suspend repayments indefinitely.
 Management Service Agreements
  These services include financial management, gold administration and hedging, technical and engineering services, mineral resourceservices and other management related services. We own a 40% interest in CGR. ERPM is a wholly-owned subsidiary of CGR. Thesearrangements allow us to monitor and provide input on the management of these companies in which we have an investment.
  management fee for services performed at the Crown Section was R0.7 million ($0.07 million) per month and our management fee forservices performed at the ERPM Section is approximately R1.5 million ($0.1 million) per month. The agreement with CGR entered onJuly 1, 2002, was for one year and was renewable annually. The agreement with the ERPM Section entered on July 1, 2002, was for afixed two year period with an option to renew. In April 2004, the management fees were revised to R0.3 million ($ 0.04 million) permonth for both the Crown Section and the ERPM Section. Subject to the annual renewal clauses of these management contracts themanagement fees were further revised to R1.0 million ($0.1 million) per month for the Crown Section and the ERPM Section, duringfiscal 2006.


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 Assistance with regards to funeral expenses
  M.P. Ncholo, a non-executive director of our Company, and executive director of KBH, with regards to funeral expenses relating tothe death of a family member who was a temporary employee of ERPM. In terms of ERPM’s practice, the funds were advanced oncompassionate grounds to assist the family with costs associated with the funeral. This amounted to R90,447 ($14,414). At October31, 2005 this amount was still outstanding in the accounts of ERPM.
 Black Economic Empowerment, or BEE, transaction with Khumo Bathong Holdings (Pty) Limited, or KBH
  the acquisition by KBH of a 15% stake in our South African Operations. The intention of the transaction is to bring us into fullcompliance with the 10-year, 26% black economic empowerment equity requirement as stipulated in the Mining Charter.
  settled through the issue of 4,451,219 of our ordinary shares, which at the date of issue, represented approximately $4.3 million (R28.9million).
  KBH to cover all of our South African assets. The transaction has been facilitated by the IDC, which agreed to a debt restructuring inCGR.
  vehicle, DRDGOLD South African
  SA for $1.4 million (R9.3 million). This further equity tranche will include a 6% stake to be placed in a new Employee Trust. Thetransaction has been financed by the
  issuance of $4.8 million (R31.8 million) new Khumo Gold preference shares.
 Emperor Mines Limited, or Emperor
    Facility to Emperor as part of a re-financing package, which includes an agreement with ANZ Bank to restructure Emperor’s existingdebt 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 theConvertible Loan Facility.
  interest in the Tuvatu Gold Prospect, or by December 31, 2007. Emperor has previously announced a conditional sale agreement inrelation to the Tuvatu Gold Prospect and expects to receive consideration of approximately A$10.0 million ($7.6 million) on completionof that transaction.
  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 StockExchange prior to the date of conversion.
   Emperor with management and technical services going forward. As at October 31, 2005, $0.1 million had been received for servicesrendered.


129
  wholly owned subsidiary, DRD (Isle of Man) Limited, or 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 Gold Mines Limited and all of our explorationtenements in Papua New Guinea. Refer to Item 4A.: “History and Development of the Company.”
 Employment agreements with executive directors
  and from DRD (Isle of Man) $250,000 per annum. He is also eligible, under his agreement with us and his agreement with DRD (Isleof Man), to receive an incentive bonus of up to 40% of his annual remuneration package in respect of each of four bonus cycles of 6months each, over the duration of his appointments, 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 460,000 of our ordinary shares in four equaltranches at intervals of 6 months over the duration of his agreements of employment. In terms of a JSE listing requirement theseallotments were subject to approval by shareholders. We have since decided, and Mr. M.M. Wellesley-Wood has agreed, that we willnot seek the consent of our shareholders and that he will not be issued these shares. An alternative means of achieving the objective ofthe retention inventive has been implemented through payment of a bonus. In addition, pursuant to his employment agreement, Mr.M.M. Wellesley-Wood became entitled to an amount equal to 92% of his annual remuneration package, plus interest, by relinquishingthe position of Chief Executive Officer and Deputy Chairman of the Company. These agreements were entered into on May 7, 2004,and regulate the employment relationship with Mr. M.M. Wellesley-Wood that commenced on December 1, 2003 and ending onNovember 30, 2005.
  DRD (Isle of Man) $200,000 per annum. Mr. I.L. Murray is eligible, under his agreement with us and his agreement with DRD (Isleof Man), to receive an incentive bonus in respect of up to 50% of his annual remuneration package in respect of each of four bonuscycles of 6 months each over the duration of his appointments, on condition that he achieves certain key performance indicators.Mr. I.L. Murray’s agreements also provide that he will receive a total of up to 366,000 of our ordinary shares in four equal tranches atintervals of 6 months over the duration of his agreements of employment. In terms of a JSE listing requirements these allotments weresubject to approval by shareholders. We have since decided, and Mr. I.L. Murray has agreed, that we will not seek the consent of ourshareholders and that he will not be issued these shares. An alternative means of achieving the objective of the retention inventive hasbeen implemented through payment of a bonus. Mr. I.L. Murray became entitled to an amount equal to 93% of his annual South Africanremuneration package as determined on December 1, 2003, plus interest, by relinquishing the position of Chief Financial Officer. Theseagreements were entered into on May 7, 2004 and regulate the employment relationship with Mr. I.L. Murray that commenced onDecember 1, 2003 and ending on November 30, 2005.
  Company an all-inclusive remuneration package or R2.0 million (0.3 million) per annum. Mr. J.W.C. Sayers is eligible under hisemployment agreement, for an incentive bonus of up to 50% of his annual remuneration package in respect of each of four bonus cyclesof 6 months each over the duration of his appointment, on condition that he achieves certain key performance indicators. This servicecontract expires on September 4, 2007.
 Appointment of J. Turk as Non-Executive Director
  Network Limited (GoldMoney.com). In April 2004, we acquired 50.25% of the shares in Net-Gold Services Limited, a subsidiary ofG.M. Network Limited (GoldMoney.com).
 7C. INTERESTS OF EXPERTS AND COUNSEL


130
 ITEM 8. FINANCIAL INFORMATION
 8A. CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION
  Legal Proceedings
  Dividend Policy
  8B. SIGNIFICANT CHANGES


131
 ITEM 9. THE OFFER AND LISTING
 9A. OFFER AND LISTING DETAILS
   Price Per
 Ordinary Share
 R
 Price Per
 ADS
 $
 Average Daily
 Trading
 Volume
 Year Ended
 High
 Low
 High
 Low
 Ordinary
 Share
 ADSs
                                    Price Per
 Ordinary Share
 R
 Price Per ADS
 $
 Average Daily
 Trading Volume
 Month Ended
 High
 Low
 High
 Low
 Ordinary
 Share
 ADSs
 May 31, 2005.........................................
 7.81
 4.15
 1.18
 0.62
 149,204
 1,855,206
 June 30, 2005.........................................
 8.09
 5.69
 1.16
 0.88
 130,762
 2,737,937
 July 31, 2005 .........................................
 6.80
 5.60
 1.09
 0.87
 84,019
 1,793,120
 August 31, 2005 ....................................
 7.50
 5.70
 1.06
 0.85
 59,960
 1,445,521
 September 30, 2005...............................  10.25
 6.60
 1.66
 1.03
 412,403
 4,384,106
 October 31, 2005 ...................................
 9.40
 8.20
 1.48
 1.21
 486,580
 2,226,405
 9B. PLAN OF DISTRIBUTION
  9C. MARKETS
 Nature of Trading Markets
  trade on the Nasdaq Capital Market (formerly Nasdaq SmallCap Market) in the form of ADRs under the symbol “DROOY.” Ourordinary shares trade on the JSE under the symbol “DUR.” Our ordinary shares also trade on the LSE (symbol: DBNR), the Marche Libreon the Paris Bourse (symbol: DUR), Brussels Bourse (symbol: DUR) in the form of International Depository Receipts, Port MoresbyStock Exchange (symbol: DUR) and ASX (symbol: DRD). 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, asdepositary. Each ADR represents one ADS. Each ADS represents one of our ordinary shares. Prior to February 2001, our ADSs traded onthe Nasdaq National Market.


132
 Nasdaq Exemption
 Exemption from the shareholder approval requirements
  investors resulting in the issuance of ordinary shares, and securities convertible into ordinary shares, totaling 46,843,902, or 25.43% ofthe total shares outstanding on a pre-issuance basis. Included within those issuances, on December 12, 2003, the Company enteredinto an agreement granting Investec the option to acquire 10.2 million ordinary shares. The Company requested an exemption fromNasdaq Marketplace Rule 4350(i)(1)(D) in reliance upon Nasdaq Marketplace Rule 4350(a).  shareholder approval is required upon issuing 20% or more of the common stock or 20% or more of the voting power outstandingbefore the issuance for less than the greater of book or market value of the stock. Nasdaq granted this exemption on the basis that theshareholder approval requirements of Rule 4350(i)(1)(D) are contrary to generally accepted business practices of companies located inSouth Africa.
  of any shares or rights to shares, which approval can be provided by specific authority or a general authority granted by means of aresolution passed by shareholders in a general meeting. JSE Listing Requirements require 75% shareholder approval for any issuanceof shares for cash. JSE Listing Requirements do, however, permit an issuer to issue shares for cash under a general authority grantedby 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 describedabove, there was no JSE requirement that would mandate specific shareholder approval for these transactions. The JSE ListingRequirements accept a general authority by our shareholders under certain circumstances. The shareholders had approved a generalauthority 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 theseshares 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 % ofthe issuer’s outstanding shares. Consistent with the practice of companies incorporated in South Africa, our articles of association onlyrequire a quorum of three members. As a result, and in connection with the listing of our ADSs on the Nasdaq National Market in July1996, we requested, and Nasdaq granted us in October 1996, an exemption from compliance with the Rule 4350(f) quorum requirement.
 9D. SELLING SHAREHOLDERS
  9E. DILUTION
  9F. EXPENSES OF THE ISSUE


133
 ITEM 10. ADDITIONAL INFORMATION
 10A. SHARE CAPITAL
  10B. MEMORANDUM AND ARTICLES OF ASSOCIATION
 Description of Our Memorandum and Articles of Association and Ordinary Shares
      Companies Act, 1973 (as amended), or the Companies Act, and the requirements of the JSE, all as in effect on October 31, 2005. Thesummary does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Articles, theCompanies Act, and the requirements of the JSE.
   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 orpowers of control exercisable by us in relation to our subsidiary companies so that the aggregate principal amount outstanding in respectof us and any of our subsidiary companies, as the case may be, exclusive of inter-company borrowings, shall not, except with the consentof our shareholders at a general meeting, exceed R30 million or the aggregate from time to time of our issued and paid up capital, togetherwith the aggregate of the amounts standing to the credit of all distributable and non-distributable reserves, any of our share premiumaccounts and our subsidiaries' share premium accounts certified by our auditors and which form part of our and our subsidiaries' financialstatements, 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 isauthorized.
    discussion, depending on the nature of the interest, he shall not be allowed to vote and shall not be counted, for the purpose of anyresolution 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 believesthat our business should be conducted according to the highest legal and ethical standards. In accordance with their practice, allremuneration of directors is approved by the Remuneration and Nominations Committee.


134
 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 ofour directors, on a rotating basis, are subject to re-election at each annual general shareholders’ meeting. Retiring directors usually makethemselves 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 shareholdersconvening a general meeting for a date not less than 21 days and not more than 35 days from the date of the notice. Directors mayconvene 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 noticeis required.
  after the time selected for the meeting, such meeting shall be dissolved. The necessary quorum is three members present in person orrepresented 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 generalmeeting unless any preference dividend is in arrears for more than six months at the date on which the notice convening the generalmeeting is posted to the shareholders.
 Dividends
  proportion to the number of shares they each hold. No dividend shall be declared except out of our profits. Dividends may be declaredeither free or subject to the deduction of income tax or duty in respect of which we may be charged. Holders of ordinary shares areentitled to receive dividends as and when declared by the directors. Holders of cumulative preference shares are entitled to receivecumulative preferential dividends in priority to the holders of our ordinary shares equal to the prescribed portion of 3% of our futurerevenue generated by the exploitation or other application of the mineral rights represented by the Argonaut Project. All unclaimeddividends are forfeited back to us after a period of twelve years.
 Ownership Limitations
   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 theshareholders in proportion to their respective shareholdings. On a winding up, our cumulative preference shares rank, in regard to allarrears of preference dividends, prior to the holders of ordinary shares. As of October 31, 2005, 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 otherparticipation in the distribution of our surplus assets on winding-up.


135
 Reduction of Capital
  share capital including, without limitation, any stated capital, capital redemption reserve fund and share premium account by makingdistributions 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 theresolution 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 ofall or part of our mineral rights without the consent in writing of the registered holders of our cumulative preference shares or the priorsanction 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, forexample, in a general meeting, upon recommendation of our directors, resolve that any surplus funds representing capital profits arisingfrom the sale of any capital assets and not required for the payment of any fixed preferential dividend, be distributed among our ordinaryshareholders. However, no such profit shall be distributed unless we have sufficient other assets to satisfy our liabilities and to cover ourpaid up share capital.
 10C. MATERIAL CONTRACTS
   Agreement of Employment between Durban Roodepoort Deep, Limited and Mr. M.M. Wellesley Wood, dated as of December 1, 2003.
 The agreement states the employment terms and basis of remuneration for this executive director, with regards to duties forDurban Roodepoort Deep, Limited. The term of the contract is from December 1, 2003 to November 30, 2005. Mr. M.M.Wellesley-Wood receives an all-inclusive remuneration package of R1.9 million ($0.3 million), from us. He is also eligible toreceive an incentive bonus of up to 40% of his annual remuneration package in respect of each of four bonus cycles of 6months each, over the duration of his appointments, on condition that he achieves certain agreed key performance indicators.Mr. M.M. Wellesley-Wood’s agreement also provides that he will receive a total of up to 250,000 of our ordinary shares infour equal tranches at intervals of 6 months over the duration of his agreement of employment. In terms of a JSE listingrequirement 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.
 Service Agreement between DRD (Isle of Man) Limited and Mr. M.M. Wellesley-Wood, dated as of December 1, 2003.
 The agreement states the employment terms and basis of remuneration for this executive director, with regards to duties for DRD(Isle of Man) Limited. Mr. M.M. Wellesley-Wood receives an all-inclusive remuneration package of $250,000 per annum,from DRD (Isle of Man). The term of the contract is from December 1, 2003 to November 30, 2005. He is also eligible toreceive an incentive bonus of up to 40% of his annual remuneration package in respect of each of four bonus cycles of sixmonths each, over the duration of his appointment, on condition that he achieves certain agreed key performance indicators.


136
 Agreement of Employment between Durban Roodepoort Deep, Limited and Mr. I.L. Murray, dated as of December 1, 2003.
  Durban Roodepoort Deep, Limited. Mr. I.L. Murray receives an all-inclusive remuneration package of R1.5 million ($0.2million) from us. Mr. I.L. Murray is eligible for an incentive bonus in respect of up to 50% of his annual remunerationpackage in respect of each of four bonus cycles of 6 months each over the duration his appointments, on condition that heachieves certain key performance indicators. Mr. I.L. Murray’s agreement also provides that he will receive a total of up to198,000 of our ordinary shares in four equal tranches at intervals of 6 months over the duration of his agreement ofemployment. In terms of a JSE listing requirement these allotments were subject to approval by shareholders. We have sincedecided, and Mr. I.L. Murray has agreed, that we will not seek the consent of our shareholders and that he will not be issuedthese shares. The term of the contract is from December 1, 2003 to November 30, 2005.
 Service Agreement between DRD (Isle of Man) Limited and Mr. I.L. Murray, dated as of December 1, 2003.
 The agreement states the employment terms and basis of remuneration for this executive director, with regards to duties for DRD(Isle of Man) Limited. Mr. I.L. Murray receives an all-inclusive remuneration package of $200,000 per annum, from DRD(Isle of Man). The term of the contract is from December 1, 2003 to November 30, 2005. He is also eligible to receive anincentive bonus of up to 50% of his annual remuneration package in respect of each of four bonus cycles of six months each,over the duration of his appointment, on condition that he achieves certain agreed key performance indicators.
 Confirmation, between Durban Roodepoort Deep, Limited and Investec Bank (Mauritius) Limited, dated December 17, 2003.
 On December 17, 2003, we entered into an option agreement with Investec (Mauritius) granting Investec (Mauritius) the optionto acquire 10.2 million ordinary shares. The strike price per share of the option is 95.5% of the trade-weighted average price ofour ADSs for the 10 days prior to exercise. The option had an expiry date of March 15, 2004. The option was exercised onFebruary 19, 2004 at a price of $3.21 per share for a total consideration of $32.3 million. Of this $19.3 million was used to closeout 180,000 ounces or 57.1% of the then committed 315,000 ounces under the Eskom gold for electricity contract.
 Subscription and Option Agreement made and entered between DRD (Isle of Man) Limited, Net Gold Services Limited and G.M. NetworkLimited, dated January 26, 2004.
 Under this agreement we subscribed for 50.25% of Net-Gold Services Limited’s shares in issue. In addition a put and calloption was awarded with regards to the exchange of the shares that we acquired in Net-Gold Services Limited for 523.26 sharesin G.M. Network Limited. The options expire on December 31, 2007.
 Forward Bullion Transaction Agreements made and entered between Durban Roodepoort Deep, Limited and Investec Bank Limited,dated February 4, 2004, February 6, 2004, February 11, 2004 and February 12, 2004.
 These agreements constitute forward bullion sales transactions whereby a total of 90,000 ounces of gold bullion was forwardpurchased from Investec Bank Limited.
 Loan Agreement made and entered between Durban Roodepoort Deep, Limited and Investec Bank Limited, dated June 24, 2004.
 The agreement makes available to the Company a loan facility of R100.0 million ($15.9 million). The facility bears interest atthe three-month Johannesburg Interbank Acceptance Rate, or JIBAR, plus 300 interest basis points. Investec calls for paymentby delivering a repayment notice. Upon receipt of the notice we may elect to repay the facility in cash or by the issue of ourshares.
 Termination Agreement made and entered between Durban Roodepoort Deep, Limited, Eskom Holdings Limited and Investec BankLimited, dated June 24, 2004.
 During fiscal 2004, we entered into a series of agreements with Investec to close out a significant portion of the remaining hedgeposition held with Eskom Holdings Limited. This agreement terminates the previous forward bullion transaction agreements inplace with Investec and Eskom Holdings Limited, through affecting the Novation Agreement made and entered between J Aron& Company, Eskom Holdings Limited and Investec, dated June 24, 2004.


137
 Novation Agreement made and entered between J Aron & Company, Eskom Holdings Limited and Investec Bank Limited, dated June 24,2004.
 This agreement transfers the rights, liabilities, duties and obligations that Eskom Holdings Limited were bound to under theEskom gold for electricity hedge contract, to Investec, thereby creating a counterparty relationship between Investec and J Aron& Company.
 Memorandum of Understanding made and entered between Buffelsfontein Gold Mines Limited, Buffels Division and The National Unionof Mineworkers, The United Association of South Africa, The Mine Workers Union (Solidarity) and The South African Electrical WorkersAssociation regarding retrenchments associated with Number 9, 10 and 12 Shafts of Buffelsfontein Division, dated August 6, 2004.
 This agreement states the effect of the 60-day operational review under Section 189A of the South African Labour RelationsAct, on the retrenchment of employees, based on the condition that the proposals and measures that are introduced as a resultof the 60-day review prove to be effective in restoring the Buffels Section, North West Operations, to profitability, and on theBuffels Section attaining a sustainable gold price to cost ratio, that is budgeted tonnage, grade, kilograms and working costs.
 CCMA Settlement Agreement made and entered between Blyvooruitzicht Gold Mining Company Limited and The United Association ofSouth Africa, South African Equity Workers’ Association, Solidarity and The National Union of Mineworkers regarding the retrenchmentof up to 2,000 employees of the Blyvooruitzicht Gold Mining Company, dated September 2, 2004.
 This agreement outlines the sustainability thresholds of the Blyvoor Section’s business plan and the acknowledgements ofthese thresholds by the participants. Furthermore, the agreement outlines the retrenchment of up to 2,000 employees to returnthe Blyvoor Section to initially break-even point, then to work towards operating profitably over the next six months.
 Loan Agreement made and entered between Durban Roodepoort Deep, Limited and Investec Bank Limited, dated September 15, 2004.
 The agreement makes available to the Company a second loan facility of R100.0 million ($15.9 million). The facility bearsinterest at the three-month JIBAR plus 300 interest basis points. Investec calls for payment by delivering a repayment notice.Upon receipt of the notice we may elect to repay the facility in cash or by the issue of our shares.
 Subscription Agreement made and entered between DRD (Isle of Man) Limited and Durban Roodepoort Deep, Limited, dated September21, 2004.
   Loan Agreement made and entered between DRD (Isle of Man) Limited and Investec Bank (Mauritius) Limited, dated October 14, 2004.
 This agreement makes available to our subsidiary, DRD (Isle of Man) a third loan facility of $15.0 million with Investec Bank(Mauritius) Limited, or Investec (Mauritius). Subject to the terms of the agreement the facility may be used to finance futureacquisitions or rights offers by companies in which we wish to acquire shares, or it may be used for any other purpose with priorwritten consent of Investec (Mauritius). The facility bears interest at the three-month London Interbank Offered Rate, or LIBOR,plus 300 basis points. Funds advance and interest on this facility shall be repaid in cash in equal installments every three monthsfrom the date of that advance so that the amount of the advance is paid in full to Investec (Mauritius) within 36 months. Thefacility is secured by DRD (Isle of Man)'s shares in Emperor Mines Limited, DRD (Porgera) Limited and Tolukuma Gold MinesLimited. The loan agreement prohibits us from disposing of or further encumbering the secured assets. The facility restricts theflow of payments from DRD (Isle of Man) to the Company through requiring that all net operating cash or cash distributionsreceived by DRD (Isle of Man) in respect of the secured assets must be used to first service our interest and principal paymentobligations under the facility in accordance with the terms of the facility agreement. The agreement requires that we hold, in adebt servicing account, sufficient cash to cover our quarterly principal payments. Any funds in excess of these repaymentrequirements may be utilized by the Company. In addition, if DRD (Isle of Man) intends to make any payment, which is adistribution, by or on behalf of it to or for the Company, Investec (Mauritius) has the option to require DRD (Isle of Man) to pay50% of the distributed funds as a prepayment of the facility. The facility agreement contains anumber of additional customary restrictive covenants. On November 12, 2004, $7.0 million was drawn under this facility to fundour portion of the Emperor rights offering.


138
 Loan Agreement made and entered between DRDGOLD Limited and Investec Bank Limited, dated December 10, 2004.
 The agreement makes available to the Company a loan facility of R100.0 million ($15.0 million). The facility bears interest atthe three-month Johannesburg Interbank Acceptance Rate, or JIBAR, plus 300 interest basis points. Investec calls forpayment by delivering a repayment notice. Upon receipt of the notice we may elect to repay the facility in cash or by theissue of our shares.
 Underwriting Agreement between DRDGOLD Limited and certain underwriters, dated April 5, 2005.
 Under this agreement the underwriters agreed to subscribe for the offer of an aggregate of 15,804,116 ordinary no par valueshares at a subscription price of R5.50 per share on the basis that the shares will be provisionally allotted to them, but that wewill also offer the same shares to its 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 issuedpursuant to the claw-back offer will finally be allotted and issued to the underwriters. We raised R86.9 million($13.3 million) from the claw-back offer.
 Subscription Agreement between DRDGOLD Limited and Baker Steel Capital Managers LLP (BSCM), dated April 7, 2005.
 Under this agreement BSCM acted as an agent on behalf of certain clients. Each BSCM client subscribed to a certain numberof our ordinary shares which added up to an aggregate of 17,000,000 shares at a subscription price of R5.50 per share andBSCM paid the sum of R93.5 million ($14.4 million) being the subscription price due for the shares.
 Memorandum of Agreement between DRDGOLD Limited, Simmer & Jack Mines Limited and Simmer & Jack Investments(Proprietary) Limited (S&J Companies), dated August 31, 2005.
 Under this agreement we agreed to sell 13,000,460 ordinary no par value shares in Buffelsfontein Gold Mines Limited (inprovisional liquidation) to the S&J Companies for R0.01 per share as part of a scheme of arrangement between the S&JCompanies and Buffelsfontein’s creditors in terms of Section 311 of the South African Companies Act, 1973. This agreementis conditional upon the S&J Companies assuming all existing and future obligations relating to the pumping and managementof underground water in the Klerksdorp/Orkney/Stilfontein/Hartebeestfontein area and providing us with indemnity againstall liability arising in this regard.
 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 July13, 2005.
  Limited (ERPM) and the BVI Companies and the debentures it subscribed for in ERPM to us in return for the payment of thepurchase price of 4,451,219 of our ordinary shares to the value of approximately $4.3 million (R29.0 million), which havealready been allotted and issued to the IDC.
 Share Sale Agreement entered into among The Industrial Development Corporation of South Africa Limited (IDC), DRDGOLDLimited, Business Ventures Investment No. 750 (Pty) Ltd (BVI 1) and Business Ventures Investment No. 751 (Pty) Ltd (BVI 2), datedJuly 13, 2005.
 Under this agreement we acquired from the IDC, 60 ordinary shares in BVI 1, representing 60% of the total issued sharecapital of BVI 1, and 60 ordinary shares in the BVI 2, representing 60% of the total issued share capital of BVI 2, for thepurchase price of R120.00.
 Memorandum of Understanding between DRDGOLD Limited and Khumo Bathong Holdings (Pty) Ltd (KBH), dated July 6, 2005.
 Under this Memorandum of Understanding the parties agreed that East Rand Proprietary Mines Limited, Crown GoldRecoveries (Pty) Limited and Blyvooruitzicht Mining Company Limited will be consolidated under one subsidiary, namelyDRDGOLD South African Operations (Pty) Limited, or DRDSA. Furthermore KBH will subscribe for an initial 15% stake inDRDSA and subsequently a KBH-led broad based black economic empowerment consortium will subscribe for a further11% in DRDSA.


139
 Facility B Loan Agreement between Investec Bank (Mauritius) Limited and DRD (Isle of Man)Limited (DRDIOM), dated March 3, 2005.
 This agreement made available to DRDIOM an acquisition loan facility for a maximum of $35.0 million. Subsequent toJune 30, 2005, this facility was drawn down in the amount of $10.0 million. The agreement provides for the repayment of theloan with our ordinary shares. In this regard, we allotted and issued 3,353,365 of our ordinary shares, to the value of $4.9million, and an additional 1,833,715 of our ordinary shares, to the value of $2.5 million, to Investec Bank (Mauritius) Limitedto repay part of the drawn down amount.
 Convertible Loan Facility Agreement between DRDGOLD Limited and Emperor Mines Limited (Emperor), dated July 8, 2005.
 Under this agreement we agreed to provide an A$10.0 million ($7.6 million) convertible loan facility for financial andoperational assistance to Emperor. The term of this facility will be for 2.5 years with a fixed interest of 9% per annum. Thefacility is secured by a first ranking charge over Emperor’s 100% interest in the Tuvatu Gold Prospect in Fiji. The facility isrepayable upon either the receipt of proceeds expected from the sale of Emperor’s interest in the Tuvatu Gold Prospect or byDecember 31, 2007. This facility is also convertible at our election into ordinary fully paid shares of Emperor.
 Agreement of Employment between DRDGOLD Limited and Mr. J.W.C. Sayers, dated as of August 10, 2005.
 Under this agreement Mr. J.W.C. Sayers, appointed as Chief Financial Officer on September 5, 2005, 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 hisemployment agreement, for an incentive bonus of up to 50% of his annual remuneration package in respect of each of fourbonus cycles of 6 months each over the duration his appointment, on condition that he achieves certain key performanceindicators.
 Option Agreement entered into by and between DRDGOLD Limited and M5 Developments (Pty) Limited, dated July 21, 2005.
 Under this agreement M5 Developments (Pty) Ltd was granted an option, for a non-refundable fee of R0.5 million($0.1 million) per month, until exercise of the option, to acquire the Durban Deep Section’s mine village for R15.0 million($2.2 million). The option period initially expired on September 19, 2005, but was extended to November 19, 2005. OnNovember 19, 2005 the option was exercised and the option fee will be deemed part payment of the purchase consideration.
 Share Sale Agreement between DRD (Offshore) Limited, DRDGOLD Limited and Emperor Mines Limited, dated November 16, 2005
 We concluded a sale and purchase agreement with Emperor, in terms of which Emperor will acquire our wholly ownedsubsidiary, DRD (Isle of Man) Limited, or DRD (Isle of Man), which in turn holds our Papua New Guinea assets, comprisinga 20% interest in the Porgera Joint Venture, a 100% interest in Tolukuma Gold Mines Limited and all of our explorationtenements in Papua New Guinea. Currently we, through DRD (Isle of Man), hold a 45.33% interest in Emperor.


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 10D. EXCHANGE CONTROLS
  available documents. The following summary is not a comprehensive description of all the exchange control regulations. The discussionin this section is based on the current law and positions of the South African Government. Changes in the law may alter the exchangecontrol provisions that apply to you, possibly on a retroactive basis.
 Introduction
  exchange control matters in South Africa are regulated by the South African exchange control regulations, or the Regulations. TheRegulations form part of the general monetary policy of South Africa. The Regulations are issued under Section 9 of the Currency andExchanges Act, 1933 (as amended). In terms of the Regulations, the control over South African capital and revenue reserves, as well asthe 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 widediscretion. Certain banks authorized by the Treasury to co-administer certain of the exchange controls, are authorized by the Treasury todeal in foreign exchange. Such dealings in foreign exchange by authorized dealers are undertaken in accordance with the provisions andrequirements of the exchange control rulings, or Rulings, and contain certain administrative measures, as well as conditions and limitsapplicable to transactions in foreign exchange, which may be undertaken by authorized dealers. Non-residents have been granted generalapproval, 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 tothese exchange control regulations.
  in the application of monetary policy, detrimental effects on inward foreign investment and administrative costs associated therewith. TheSouth African Finance Minister has indicated that all remaining exchange controls are likely to be dismantled as soon as circumstancespermit. Since 1998, there has been a gradual relaxation of exchange controls. The gradual approach to the abolition of exchange controlsadopted by the Government of South Africa is designed to allow the economy to adjust more smoothly to the removal of controls thathave been in place for a considerable period of time. The stated objective of the authorities is equality of treatment between residents andnon-residents with respect to inflows and outflows of capital. The focus of regulation, subsequent to the abolition of exchange controls, isexpected 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 notpermitted to export capital from South Africa or hold foreign currency. In addition, South African companies are required to obtain theapproval of SARB prior to raising foreign funding on the strength of their South African balance sheets, which would permit recourse toSouth Africa in the event of defaults. Where 75% or more of a South African company's capital, voting power, power of control orearnings is directly or indirectly controlled by non-residents, such a corporation is designated an “affected person” by SARB, and certainrestrictions 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 theirability to utilize profits of one foreign business to finance operations of a different foreign business. South African companies establishingsubsidiaries, branches, offices or joint ventures abroad are generally required to submit financial statements on these operations as well asprogress reports to SARB on an annual basis. As a result, a South African Company's ability to raise and deploy capital outside theCommon Monetary Area is restricted.


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  this stage. Some of the more salient changes to the South African exchange control provisions over the past few years have been asfollows:
  corporations wishing to invest in countries outside the Common Monetary Area, in addition to what is set out below, apply forpermission to enter into corporate asset/share swap and share placement transactions to acquire foreign investments. The lattermechanism entails the placement of the locally quoted corporation's shares with long-term overseas holders who, in payment forthe 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 ($149.6 million) tofinance approved investments abroad and up to R2.0 billion ($299.2 million) to finance approved new investments in Africancountries. However, the approval of SARB is required in advance. On application to SARB, corporations are also allowed to usepart of their local cash holdings to finance up to 10% of approved new foreign investments where the cost of these investmentsexceeds the current limits;
  as a general rule, SARB requires that more than 50% of equity of the acquired off-shore venture is acquired within apredetermined period of time, as a prerequisite to allowing the expatriation of funds. If these requirements are not met, SARBmay instruct that the equity be disposed of. In our experience (with the acquisition of Emperor Mines) SARB has taken acommercial 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 byauthorized dealers, in terms of the Rulings.
    allowance. The balance of the emigrant's funds will be blocked and held under the control of an authorized dealer. These blocked fundsmay only be invested in:
    securities quoted on the JSE and financial instruments listed on the Bond Exchange of South Africa which are deposited with anauthorized dealer and not released except temporarily for switching purposes, without the approval of SARB. Authorized dealersmust at all times be able to demonstrate that listed or quoted securities or financial instruments which are dematerialized orimmobilized 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 whenexisting exchange controls will be abolished or whether they will be continued or modified by the South African Government in thefuture.
 Sale of Shares
  Common Monetary Area between non-residents of the Common Monetary Area. In addition, the proceeds from the sale of ordinaryshares on the JSE on behalf of shareholders who are not residents of the Common Monetary Area are freely remittable to suchshareholders. Share certificates held by non-residents will be endorsed with the words “non-resident,” unless dematerialized.


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 Dividends
    receive any dividends payable in respect of the shares underlying the ADSs, subject to the terms of the deposit agreement entered onAugust 12, 1996, and as amended and restated, between the Company and The Bank of New York, as the depository. Subject toexceptions provided in the deposit agreement, cash dividends paid in Rand will be converted by the depositary to Dollars and paid by thedepositary to holders of ADSs, net of conversion expenses of the depositary, in accordance with the deposit agreement. The depositarywill charge holders of ADSs, to the extent applicable, taxes and other governmental charges and specifies fees and other expenses.
 Voting rights
   10E. TAXATION
 Material Income Tax Consequences
  representation with respect to the consequences to any particular purchaser of our securities is made hereby. Prospective purchasers areurged to consult their own tax advisers with respect to their particular circumstances and the effect of US national, state or local tax lawsto which they may be subject.
 South Africa
   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 derivedfrom a South African source but will be regarded as exempt from taxation in terms of Section 10(1)(hA) of the South African Income TaxAct, 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 anevent 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 aggregateduring 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 ondividends received by or accrued to non-resident shareholders of companies listed in South Africa and non-residents will receive the samedividend as South African resident shareholders. Prior to payment of the dividend, the Company pays Secondary Tax on Companies at arate of 12.5% of the excess of dividends declared over dividends received in a dividend cycle but the full amount of the dividend declaredis paid to shareholders.


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 Capital Gains Tax
    immovable property owned by the non-residents situated in South Africa, or any interest or right in or to immovable property. Anon-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 indirectlyto immovable property; or
     Taxation of dividends
    was made, a higher tax rate would apply for both mining and non-mining income. In fiscal 2005, 2004 and 2003, the tax rates fortaxable mining and non-mining income, for companies that elected the STC exemption were 46% and 38%, respectively. During thosesame years the tax rates for companies that did not elect the STC exemption were 37% and 30%, respectively. In 1993, the Companyelected not to be exempt from STC, as this would have meant that the Company would have been liable for normal taxation at thehigher rates of 46% for mining income and 38% for non-mining income. The Company, having chosen not to be subject to the STCexemption, is subject to 37% tax on mining income and 30% for non-mining income. However, with the exception of Blyvoor, all ofthe Company's subsidiaries elected the STC exemption. Any dividends paid by Blyvoor, being a wholly-owned subsidiary of theCompany, would be exempt from STC. Any dividends paid by the Company, to the extent that they are paid out of income fromBlyvoor, will be subject to STC.
  rates by the South African Government. Tax rates for taxable mining and non-mining income for companies that elected the STCexemption are 45% and 37%, respectively. The tax rates for taxable mining and non-mining income for companies that did not electthe STC exemption are 35% and 29%, respectively.
  shares. Should South Africa decide in the future to impose a withholding tax on dividends paid to a US holder with respect to shares, theTreaty 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 ofour voting stock and 15 percent of the gross amount of the dividends in all other cases. The above provisions shall not apply if thebeneficial owner of the dividends is resident in the US, carries on business in South Africa through a permanent establishment situated inSouth Africa, or performs in South Africa independent personal services from a fixed base situated in South Africa, and the dividends areattributable to such permanent establishment or fixed base.
 United States
 Certain 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 assetsfor US federal income tax purposes. This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended, orthe Code, published rulings, judicial decisions and the Treasury regulations, all as currently in effect and all of which are subject tochange, possibly on a retroactive basis. This discussion has no binding effect or official status of any kind; we cannot assure holders thatthe 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 orcurrencies, 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,”


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 “conversion transaction,” “synthetic security,” “straddle,” “constructive sale” or other integrated investment, persons whose functionalcurrency in not the US dollar, or persons that actually or constructively own ten percent or more of our voting stock). This discussionaddresses 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 USpersons have the authority to control all substantial decisions of the trust or if the trust has made a valid election to be treated as aUS person.
  partner and on the activities of the partnership. Partners of partnerships holding any notes, ordinary shares or ADSs are urged to consulttheir 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 consequencesto 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 toUS federal income tax.
  liquidation and distributions in redemption of stock that are treated as exchanges, will be taxed to US holders as ordinary dividend incometo 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” onthe date the dividend distribution is includable in such US holder's income, regardless of whether the payment is in fact converted intoDollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date a US holder includesthe 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 willbe applied against and reduce the holder's basis in the ordinary shares or ADSs. To the extent that these distributions exceed the USholder's tax basis in the ordinary shares or ADSs, as applicable, the excess generally will be treated as capital gain, subject to thediscussion below under the heading “Passive Foreign Investment Company.” We do not intend to calculate our earnings or profits for USfederal 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 thetime such dividends are paid, either (i) we are eligible for benefits under a qualifying income tax treaty with the US or (ii) our ordinaryshares 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 holdingperiod requirements and an exception applicable if we are treated as a passive foreign investment company as discussed under theheading “Passive Foreign Investment Company.” US holders are urged to consult their own tax advisors regarding the US federal incometax 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 buyor sell a currency on or before two business days following the date of the execution of the contract. If such a spot rate cannot bedemonstrated, the US Internal Revenue Service has the authority to determine the spot rate.


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  limitation on the use of passive activity losses and, therefore, generally may not be offset by passive activity losses, and as “investmentincome” for purposes of the limitation on the deduction of investment interest expense. Such dividends will not be eligible for thedividends received deduction generally allowed to a US corporation under Section 243 of the Code. Dividend income will be treated asforeign source income for foreign tax credit and other purposes. In computing the separate foreign tax credit limitations, dividend incomeshould generally constitute “passive income,” or in the case of certain US holders, “financial services income.”
  distributions with respect to the ordinary shares or ADSs. Should South Africa decide in the future to impose a withholding tax on suchdistributions, the tax treaty between the United States and South Africa would limit the rate of this tax to 5 percent of the gross amount ofthe distributions if a US holder holds directly at least 10 percent of our voting stock and to 15 percent of the gross amount of thedistributions in all other cases. In addition, if South Africa decided in the future to impose a withholding tax on distributions with respectto the ordinary shares or ADSs, a determination would need to be made at such time as to whether any South African income taxeswithheld would be treated as foreign income taxes eligible for credit against such US holder's US federal income tax liability, subject tolimitations and conditions generally applicable under the Code. Any such taxes may be eligible at the election of such US holder, fordeduction in computing such US holder's taxable income. The limitation on foreign taxes eligible for credit is calculated separately withrespect to specific classes of income. The calculation of foreign tax credits and, in the case of a US holder that elects to deduct foreigntaxes, the availability of deductions is complex and involves the application of rules that depend on a US holder's particularcircumstances. US holders are urged to consult their own tax advisors regarding the availability to them of foreign tax credits ordeductions 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 taxbasis in the ordinary shares or ADSs. Subject to the application of the “passive foreign investment company” rules discussed below, suchgain 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 orADSs for more than one year. The deductibility of capital losses is subject to limitations. Gain or loss recognized by a US holder on thetaxable 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 receivespayment in Rand and converts Rand into US Dollars at a conversion rate other than the rate in effect on the settlement date may have aforeign 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 withoutthe 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 USdollar value of the currency received prevailing on the trade date and the settlement date. Any such currency gain or loss will be treated asordinary income or loss and would be in addition to gain or loss, if any, recognized by such US holder on the disposition of such ordinaryshares 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 grossincome, including our pro rata share of the gross income of any company in which we are considered to own 25% or more of the sharesby 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 anycompany in which we are considered to own 25% or more of the shares by value, were assets that produced or were held for theproduction of passive income. If we were a PFIC, US holders of the ordinary shares or ADSs would be subject to special rules withrespect 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 distributionsreceived by such US holder during the three preceding taxable years in respect of the ordinary shares or ADSs or, if shorter, such USholder'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, asapplicable;


146
  the amount allocated to the taxable year in which a US holder realizes the gain or excess distribution will be taxed as ordinaryincome;
    the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each suchyear.
  period, if we cease to satisfy the requirements for PFIC classification, the US holder may avoid PFIC classification for subsequent years ifsuch holder elects to recognize gain based on the unrealized appreciation in the ordinary shares or ADSs through the close of the tax yearin which we cease to be a PFIC. Additionally, if we are a PFIC, a US holder who acquires ordinary shares or ADSs from a decedentwould be denied the normally available step-up in tax basis for such notes, ordinary shares or ADSs to fair market value at the date ofdeath 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 USholder would include in ordinary income or loss for each taxable year an amount equal to the difference as of the close of the taxable yearbetween 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 priortaxable 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 taxbasis 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'stax basis or the fair market value of the ordinary shares or ADSs. US holders desiring to make the mark-to-market election are urged toconsult 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 firsttaxable year in which such holder owns the ordinary shares or ADSs and if we comply with certain reporting requirements. However, wedo not intend to supply US holders with the information needed to report income and gain pursuant to a “qualified electing fund” electionin 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 ofour capital stock, are not within our control and can cause us to become a PFIC. Accordingly, there can be no assurance that we will notbecome a PFIC.
 Rules relating to a PFIC are very complex. US holders are urged to consult their own tax advisors regarding the application ofPFIC 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 therecipient of such payment is not an “exempt recipient” and fails to supply certain identifying information, such as an accurate taxpayeridentification number, in the required manner. Generally, individuals are not exempt recipients, whereas corporations and certain otherentities generally are exempt recipients. The backup withholding tax rate is currently 28%. For payments made after 2010, the backupwithholding rate will be increased to 31%. Payments made with respect to our ordinary shares or ADSs to a US holder must be reportedto the Internal Revenue Service, unless the US holder is an exempt recipient or establishes an exemption. Any amount withheld from apayment to a US holder under the backup withholding rules is refundable or allowable as a credit against the holder's US federal incometax, provided that the required information is furnished to the Internal Revenue Service.
 US Gift and Estate Tax


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 10F. DIVIDENDS AND PAYING AGENTS
  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 principalexecutive offices.
   10I. SUBSIDIARIES


148
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Quantitative and Qualitative Disclosures About Market Risk
 General
  liquidity and credit risks. We enter into transactions which make use of derivative instruments to economically hedge certain exposures.These instruments include interest rate swaps and gold lease rate swaps. The decision to use these types of transactions is based on ourhedging 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 orissue derivative financial instruments for speculative purposes, nor do we 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 havefluctuated widely and are affected by numerous industry factors over which we have no control. It is not possible for us to predict theaggregate effect of these factors on the gold price. The price of gold may not remain at a level allowing us to economically exploit ourreserves. 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.
  provide our investors with exposure to increases in the price of gold, as gains would be offset against potential losses on the forwardcontracts. As a result, our policy is not to hedge forward gold sales, however, we do hedge specified projects, acquisitions and capitalexpenditure and we took advantage of opportunities in the market to close out the Eskom "gold for electricity" contract.
  the Eskom gold for electricity contract) to effectively close these positions out and eliminate any existing commitment to sell our goldproduction. In fiscal 2003, the loss that we realized on the existing positions was $72.8 million. The various counterparties, J.P. MorganChase Bank, J. Aron & Company and UBS AG, each agreed to accept a portion of the amounts due to them under the restructuringimmediately in cash, which amounted to approximately $38.1 million, with the remainder, which amounted to approximately$34.7 million, to be paid over an 18 month period. Of this amount, $6.6 million due to J.P. Morgan Chase Bank was secured by a generalnotarial covering bond and surety mortgage over the metallurgical plants of the Blyvoor, West Wits and Buffels Sections and was due tobe repaid by June 2003. We repaid the full amount to J.P. Morgan Chase Bank on March 26, 2003 and obtained a release of these assets.During July 2003, J. Aron & Company was paid in full and during August 2003 UBS AG was paid in full.
 Eskom gold for electricity contract
  for the supply of electricity. Under the terms of our agreement, we pay Eskom standard electricity tariff for all energy we consume,including the 75 GWh per month specified in the contract. This contract was to expire in September 2005. In addition, every12 month-period starting in October we adjust the amounts paid in that period in accordance with an established formula based on thegold price.
  between the contracted gold price, which is the price that was agreed on the date of the transaction for a determined period, and thearithmetic average of London PM close for each business day in the calculation period.
  does not have to be carried on our balance sheet at fair value; (2) the embedded gold for electricity forward contract possesses economiccharacteristics that are not clearly and closely related to the economic characteristics of the host contract; and (3) a separate, stand-aloneinstrument with the same terms would qualify as a derivative instrument. Accordingly, the embedded derivative was separated from thehost contract and carried at fair value.


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  265,000 ounces of the Eskom gold for electricity contract, at a cost of $25.1 million, during fiscal 2004. The fair value reflects thedifference between the price that was agreed on the date of the transaction and the forward price on June 30, 2004. As discussed inNote 24 to our financial statements, the remaining 50,000 ounces of the gold for electricity contract was closed out on April 28, 2005 at acost of $3.6 million. This was done to take advantage of the continued lower Rand gold price, in line with out policy of not hedging goldproduction.
 Put options bought
  a predetermined date. During fiscal 2003, the remaining put options were closed out. This resulted in a cash inflow of $7.1 million.Included in profit/(loss) on derivative instruments is $nil for fiscal 2005 and fiscal 2004, and a profit of $9.5 million for fiscal 2003,relating to these instruments.
 Other positions
     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 ratebased on the same amount of gold. The Company had exposure to increases in the three-month lease rate up to June 2004. The volumethe swap was based on decreases every quarter until it reached zero (by June 2004). Every quarter the Company received a fixed cashflow equal to 0.2% per annum of the volume and $280 per ounce, and paid the three-month floating lease rate converted at the thenmarket spot rate.
  gold for electricity contract. Options covering a total of 272,110 ounces were purchased for $14.9 million. These contracts were toexpire by September 2005. During fiscal 2004, the Company took advantage of the lower Rand gold price and closed out 265,000ounces of the Eskom gold for electricity contract in line with its policy of not hedging gold production. Accordingly the exposure forwhich the call options were bought as a risk management tool had been significantly reduced and the call options were closed outduring fiscal 2004, recording a gain of $0.1 million. The fair value of the call positions bought was an asset of $6.6 million as at June30, 2003.
   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 aprovision, an adequate level of provision is maintained.
  purity levels and then sells the gold, on our behalf, on the bullion market. The gold is sold by RRL on the same day as it is delivered andsettlement is made within two days. Once the gold has been assayed by RRL, the risks and rewards of ownership have passed.
  concentration of credit risk in Australia is mitigated by the reputable nature of the customer and the settlement of the proceeds within aweek.
  Australia Limited at a price negotiated by us. The concentration of credit risk in Australia is mitigated by the reputable nature of thecustomer and the settlement of the proceeds within two days.


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  proceeds are received within a week of delivery. The concentration of credit risk in Australia is mitigated by the reputable nature of thesales agent and its customers and the settlement of the proceeds within 6 days.
 Foreign currency risk
    African Reserve Bank regulations. We are thus exposed to fluctuations in the Dollar/Rand exchange rate. We conduct our operations inSouth Africa, Papua New Guinea and Fiji predominantly in Rand, Kina and Australian Dollar respectively. Currently, foreign exchangefluctuations affect the cash flow that we will realize from our operations as gold is sold in Dollars while production costs are incurredprimarily in Rands, Papua New Guinean Kina and Australian Dollars. Our results are positively affected when the Dollar strengthensagainst these foreign currencies and adversely affected when the Dollar weakens against these foreign currencies. Our cash and cashequivalent balances are held in Dollars, Rands, Papua New Guinean Kina and Australian Dollars; holdings denominated in othercurrencies are relatively insignificant. Certain of our financial liabilities are denominated in a currency other than the Rand. We are thusexposed to fluctuations in the Rand exchange rate with the relevant currency.
   Exchange rate
 Impact on revenue
 Impact on net profit after tax
        Interest rate and liquidity risk
   Liquidity
  expenditure requirements. This cash is managed to ensure surplus funds are invested in a manner to achieve maximum returns whileminimizing risks. Funding deficits for our mining operations have been financed through the issue of additional shares, by utilizingundrawn committed borrowing facilities and obtaining new facilities at competitive rates to fund our working capital requirements. Lowerinterest rates result in lower returns on investments and deposits and also may have the effect of making it less expensive to borrow fundsat then current rates. Conversely, higher interest rates result in higher interest payments on loans and overdrafts. As at June 30, 2005,undrawn committed borrowing facilities amounted to $11.0 million and at October 31, 2005, these amounted to $21.0 million.
 Interest rate swap agreement
   payable on our $66,000,000 of 6% Senior Convertible Notes due 2006 (refer to Note 18 of the financial statements). The fixed couponrate (in Dollars) of 6% per annum was swapped for a floating South African interest rate, calculated at the forward JIBAR plus 200 basispoints per annum. An amount of 60% of the coupon rate is subject to this swap agreement, based on the requirements of the SouthAfrican Reserve Bank, as this represents the amount of the funds raised utilized in South Africa. The maturity date of this agreement isNovember 2006. A 0.5% increase or decrease in the assumed weighted average interest rate would change loss/(profit) on derivativeinstruments by approximately $30,000.


151
 Long-term debt
   Dollar
 denominated
 loans
 Rand
 denominated
 loans
 Total
 $'000
 $'000
 $'000
 Interest rateVariable rate
  .............................................................................
   14,045
    n/a
    64,947
    n/a
  74,967
 4,025
 78,992
 Repayment period2006
  .........................................................................................
   9,678
    67,920
    1,394
  74,967
 4,025
 78,992
 Labor risk
  union members are blue-collar employees. The unions negotiate two year wage agreements which are binding on employees in therespective bargaining units, the largest of which consists of occupational groupings of mainly blue collar workers in the organization.These agreements are valid from July 1 in the first year to June 30 of the second year. The levels of unionization for operations outsideSouth Africa vary. It is mostly contained amongst blue collar workers and membership is below 50%. The current agreement forBlyvoor expired on June 30, 2005, however a new agreement has been reached for the next two years that provides wage increases of6% as of July 1, 2005 and 6.5% as of July 1, 2006. Agreements for the CGR and ERPM Sections are currently being negotiated.
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES


152
 PART II
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
   ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OFPROCEEDS
  ITEM 15. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  of our disclosure controls and procedures (as this term is defined under the rules of the SEC) as of June 30, 2005. Based on thisevaluation, the Company’s Chief Executive Officer and Chief Financial Officer and Non-Executive Chairman concluded that, as ofJune 30, 2005, our disclosure controls and procedures were
  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 SecuritiesExchange Act of 1934.
  quarterly results for fiscal 2004. As a result, we restated amounts in our quarterly financial statements, as described in Item 5A.:“Operating and Financial Review and Prospects – Restatement of US GAAP Quarterly Results” of our Form 20-F filed with the SECfor the year ended June 30, 2004. These restatements did not result in any restatement or revision to our financial results for fiscal2004 as a whole, which were originally announced on August 10, 2004.
    a lack of sufficient knowledge and experience among our internal accounting personnel regarding the application of USGAAP and SEC requirements;
  insufficient written policies and procedures for accounting and financial reporting with respect to the requirements andapplication of US GAAP and SEC disclosure requirements; and
    2004, KPMG informed the Audit Committee that these deficiencies constituted material weaknesses, as defined by Auditing StandardNo. 2, “An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements,”established by the Public Company Accounting Oversight Board, or PCAOB.


153
  prepared and implemented a US GAAP financial reporting process as part of our US GAAP action plan. This plan is designed togenerally improve our US GAAP reporting processes and to strengthen our control processes and procedures in order to prevent arecurrence of the circumstances that resulted in the need to restate our quarterly financial statements. The following is a description ofour US GAAP Action Plan and the steps that we have taken to implement these initiatives:
  Arrange for our senior management and certain accounting and finance-related personnel to attend training sessions on US GAAPand financial reporting responsibilities and SEC disclosure requirements. In fiscal 2005, relevant key personnel attended thefollowing training courses:
                 Modify the mandate of our internal audit function to place greater emphasis on the adequacy of, and compliance with, proceduresrelating to internal controls over US GAAP financial reporting and engage an internationally recognized accounting firm to assistour accounting department and internal audit function in the preparation of our US GAAP consolidated financial statements. OnMay 20, 2005, we engaged the services of Ernst & Young to provide assistance to the internal audit function in determining theadequacy of, and compliance with, among other things, procedures relating to internal controls over US GAAP financialreporting. Ernst & Young has assisted us in developing our Risk Based Internal Audit plan which encompasses the impact of ourUS GAAP reporting requirements.
  Seek to recruit an accounting staff member with US GAAP expertise. In October 2004, the Company employed a Certified PublicAccountant, or CPA, whose experience includes working as an external auditor for a public accounting firm, a fortune 500Nasdaq listed company and a registrant subject to compliance with the Sarbanes-Oxley Act of 2002.
  Engage an internationally recognized accounting firm to provide us with technical advice on US GAAP matters and SECdisclosure requirements on an ongoing basis. In the fourth quarter of fiscal 2005, we engaged the services of Jefferson WellsInternational Inc to provide the Company with assistance on an ad hoc basis for technical US GAAP issues that the Company’spersonnel address from time to time. They have assisted us thus far by providing us with a compliance checklist forthe fiscal 2005 Form 20-F reporting process.
    GAAP experience. Concurrent quarterly reporting in both South African Generally Accepted Accounting Practice, or SA GAAP, asthe primary basis for reporting for South African purposes and US GAAP as the primary basis for our Exchange Act filings imposes asignificant time and expense burden on a business of our size, and will prove to be challenging as we convert to InternationalFinancial Reporting Standards. Therefore, beginning in fiscal 2005, we ceased quarterly financial reporting and instead started toreport financial information semi-annually under both SA GAAP and US GAAP, with our first semi-annual financial statementsreleased for the six months ended December 31, 2004. We believe this process to be a more prudent use of our staff resources andfunds.


154
  dictate the internal controls of Porgera, nor have we reviewed its internal control. We also lacked the ability, in practice, to make theassessment, as we did not have control of this entity. Accordingly, our conclusions regarding the effectiveness of our disclosurecontrols and procedures and internal control over financial reporting do not extend to the disclosure controls and procedures andinternal control over financial reporting of Porgera. However, we do have adequate internal controls in place to ensure that thefinancial information for Porgera is appropriately included in our financial statements and we participate in Porgera's monthly operating committee meetings where Porgera's monthly financial results are discussed and reviewed.
 Changes in Internal Control over Financial Reporting
  reporting that have negatively materially affected, or are reasonably likely to negatively materially affect, our internal control overfinancial reporting.


155
 ITEM 16. CORPORATE GOVERNANCE
 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  South African Generally Accepted Accounting Practice, or SA GAAP, and financial statements and the ability to assess the generalapplication of SA GAAP. However, we do not have an audit committee financial expert (as defined in Item 16A of the Form 20-F) asno member of the Audit Committee currently has the required US GAAP experience.
   16B. CODE OF ETHICS AND CONDUCT
  the Chief Executive Officer, Chief Financial Officer and the Group Financial Manager and Financial Manager at each miningoperation as well as all other employees. The Code of Ethics and Conduct can be accessed on the Company’s website at
 www.drdgold.com
  16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
     Auditors' remuneration
 Year ended June 30,
 2005
 2004
 $’000
 $’000
                provide, include the company audit; statutory audits; comfort letters and consents; attest services; and assistance with and review ofdocuments filed with the SEC.
   terms of engagement of the external auditors. The committee pre-approves, and has pre-approved, all non-audit services provided bythe external auditors. The Audit Committee considered all of the fees mentioned above and determined that such fees are compatiblewith maintaining KPMG Inc’s independence.
 16D EXEMPTIONS FROM THE LISTING STANDADS FOR AUDIT COMMITTEES
  16E PURCHASE OF EQUITY SECURITIES BY THE ISSUER


PART III
 ITEM 17. FINANCIAL STATEMENTS
 Not
  ITEM 18. FINANCIAL STATEMENTS
 
   
 
 Page
 Report of the independent registered public accounting firm..............................................................................................
 F-1


Report of the Independent Registered Public Accounting Firm to the Board of Directors
 
 and Stockholders of DRDGOLD Limited
 We have audited the accompanying consolidated balance sheets of DRDGOLD Limited and its subsidiaries as of June 30, 2005 and 2004, 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, 2005. 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, 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, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 2005, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 3 to the consolidated financial statements, DRDGOLD Limited changed its method of accounting for asset retirement obligations effective July 1, 2002. 
  /s/ KPMG Inc   KPMG Inc Registered Accountants and Auditors Chartered Accountants (SA) Johannesburg, Republic of South Africa December
  15, 2005


F-2
 DRDGOLD Limited
     Consolidated Statements of Operations for the years ended June 30
      2005
 2004
 2003
  Notes
 $'000
 $'000
 $'000
 REVENUES
         COSTS AND EXPENSES
                  OTHER OPERATING EXPENSES
      
 
                               SELLING, ADMINISTRATION AND GENERAL CHARGES
     (including stock based compensation costs of $1.0 million (2004: $2.3 million and 2003: $4.3 million))
    NET OPERATING INCOME/(LOSS)
    NON-OPERATING INCOME/(LOSS)
                   FINANCE COSTS
         (LOSS)/PROFIT FROM CONTINUING OPERATIONS BEFORE TAX AND OTHER ITEMS
     
        (LOSS)/PROFIT FROM CONTINUING OPERATIONS AFTER TAX
        NET (LOSS)/PROFIT FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE
              NET (LOSS)/PROFIT APPLICABLE TO COMMON STOCKHOLDERS
    BASIC (LOSS)/PROFIT PER SHARE FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING POLICY (CENTS)
 
 
 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING POLICY (CENTS)
 
   LOSS FROM DISCONTINUED OPERATION (CENTS)
 
   BASIC (LOSS)/PROFIT PER SHARE (CENTS)
 
 
 DILUTED (LOSS)/PROFIT PER SHARE BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING POLICY (CENTS)
 
 
 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING POLICY (CENTS)
 
   LOSS FROM DISCONTINUED OPERATION (CENTS)
 
   DILUTED (LOSS)/PROFIT PER SHARE (CENTS)


DRDGOLD Limited
    Consolidated Balance Sheets at June 30
     2005
 2004
  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 (2004: 300,000,000) ordinary no par value shares and 5,000,000 (2004: 5,000,0000) cumulative preference shares
   Issued
   296,206,048 (2004: 233,307,667) ordinary no par value shares and 5,000,000 (2004: 5,000,000) cumulative preference shares
                           Total Liabilities and Stockholders' Equity
   
 The accompanying notes are an integral part of these Consolidated Financial Statements.


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 - JULY 1, 2002
 177,173,485
 5,000,000
 107
 351,537
 33,392
 -
 (351,778)
 (48,729)
 (15,471)
 
 Exercise of employee stock options
 2,253,699
 
 
 2,244
 
 
 
 
 2,244
 
 Issue of shares for cash
 4,794,889
 
 
 6,783
 
 
 
 
 6,783
 
 Share issue expenses
 
 
 
 (213)
 
 
 
 
 (213)
 
 Net profit for the year
 
 
 
 
 
 
 11,374
 
 11,374
 11,374
 Stock based compensation
 
 
 
 
 4,313
 
 
 
 4,313
 
 Other comprehensive income, net of tax of nil
 
 
 
 
 
 
 
 
 
 
 Decrease in mark-to-market on listed investments
 
 
 
 
 
 
 
 (1,759)
 (1,759)
 (1,759)
 Foreign currency translation adjustments
 
 
 
 
 
 
 
 (2,035)
 (2,035)
 (2,035)
 BALANCE - JUNE 30, 2003 as previously reported
 184,222,073
 5,000,000
 107
 360,351
 37,705
 -
 (340,404)
 (52,523)
 5,236
 7,580
 Retroactive adjustment for equity in losses of Emperor Mines Limited
 
 
 
 
 
 
 2,585
 2,369
 4,954
 4,954
 BALANCE - JUNE 30, 2003 as adjusted
 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)
 Analysis of accumulated other comprehensive loss:
 2002
 2003
 2004
 2005
  
     Mark-to-market on listed investments
 45
 45
 45
 -
       Foreign currency translation adjustments
 (48,774)
 (50,199)
 (44,971)
 (44,987)
       
 (48,729)
 (50,154)
 (44,926)
 (44,987)
       
 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
 
   2005             
  2004             2003
  Notes           
  $’000
 
 $'000
 
 $'000
 Net cash utilized by operating activities
 
 (23,788)      
  (25,092)        (23,878)
   
        
   
   
   
   
    
    
    
   
    
   
   
    
   
    
   
   
    
         
    
    
   
        
    
 Net cash utilized in investing activities
 
 (31,640)      
  (94,074)          (9,818)
   
   
   
        
    
   
  Net cash generated in financing activities
 
 67,441        
  88,626           55,449
            
   
   
   
   
 Net increase/(decrease) in cash and cash equivalents
 
 12,013      
  (30,540)           21,753
 Effect of exchange rate changes on cash
 
 1,619           
  8,570
 (1,182)
 Cash and cash equivalents at beginning of year
 
 22,453         
  44,423          23,852
 Cash and cash equivalents at end of year
 
 36,085         
  22,453          44,423
 Income taxes paid
 9,224
 4,075
 471
 Interest paid
 7,107
 5,014
 6,909
 The accompanying notes are an integral part of these Consolidated Financial Statements.


1. NATURE OF OPERATIONS DRDGOLD Limited, or 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, associates and joint venture) focuses its operations on the West Witwatersrand basin in South Africa and in Papua New Guinea.  As at June 30, 2005, the South African operations consist of, the Blyvoor Section and a 40% interest in Crown Gold Recoveries (Pty) Limited (comprising the Crown Section and the ERPM Section). The Australasian operations consist of the Tolukuma Section and a 20% interest in the Porgera Joint Venture, both based in Papua New Guinea. The Company has a 45.33% interest in Emperor Mines Limited, located in Fiji. It 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 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. Due to its cumulative ownership of 45.33%, the Company has 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, requires the use of the equity method of accounting if the investment gives 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 has the ability to exercise significant influence over the operations of Emperor. Accordingly, the Company has restated the prior years’ 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 requires 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, represents 19.78% of Emperor’s losses, adjusted for the amortization of the excess purchase price. The amount included for the year ended June 30, 2003, represents 14.15%, from January 2003 to March 2003, and 19.81%, from April 2003 to June 2003, of Emperor’s losses, adjusted for the amortization of the excess purchase price.


2. RESTATEMENT OF FINANCIAL STATEMENTS(continued) 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 years ended June 30, 2004 and 2003, as well as the effect on the consolidated balance sheet as at June 30, 2004 and 2003.
 Effect on consolidated statement of operations
 Year ended June 30, 2004
 
 As previously
 reported         
  Adjustments            As restated
  $'000  $'000  $'000
                 Effect on consolidated statement of operations
 Year ended June 30, 2003
 
 As previously
 reported         
  Adjustments            As restated
  $'000                      
  $'000                      
  $'000
                     Effect on consolidated balance sheet
 At June 30, 2004
 
 As previously
 reported         
  Adjustments
 As
  restated
  $'000                      
  $'000                      
  $'000
                     Effect on consolidated balance sheet
 At June 30, 2003
 
 As previously
 reported         
  Adjustments            As
 restated
  $'000                       
  $'000                     
  $'000
                 (a) Other comprehensive loss adjustments represent the Company’s share of foreign currency translation adjustments of Emperor.


3. SIGNIFICANT ACCOUNTING POLICIES The following are accounting policies used by the Group which have been consistently applied as indicated below: 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 reclamation and closure costs and environmental rehabilitation 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 estimate of future undiscounted distributions from the associate, or its disposal value, if higher, 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 discounted future cash flows expected to be derived from the associate.  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 tier 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 is measured as the amount by which the carrying amount exceeds the implied fair value of the reporting unit's goodwill.


3. SIGNIFICANT ACCOUNTING POLICIES(continued) Foreign currencyThe Group's functional currency for the South African operations is the South African Rand and for the Papua New Guinean operations is the Papua New Guinean Kina. 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 are translated at average rates. Differences arising on translation are included as a component of other comprehensive loss. The translation of amounts into US Dollars is 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 are 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 – other comprehensive loss. 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 stockpile. 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 stockpile 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.


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 and impairments. 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. 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 $12.5 million (2004: $3.5 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 2005, $11.1 million (2004: $4.1 million) of deferred stripping costs were capitalized to mining assets. The deferred stripping costs are included in the calculations of impairment tests performed in accordance with the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” 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, 2005, 2004 or 2003.


3. SIGNIFICANT ACCOUNTING POLICIES(continued) Reclamation and closure costsSFAS No. 143, “Accounting for Asset Retirement Obligations,” or SFAS No. 143, was adopted by the Group with effect from July 1, 2002, and 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 is recorded and is depreciated over the life of the asset.  Prior to the adoption of SFAS No. 143, the Group accrued for the estimated reclamation and closure liability through annual charges to earnings over the estimated life of the mine. The cumulative effect of the change in accounting policy on the balance sheet at that date was to increase mining assets by $0.55 million and increase rehabilitation liabilities by $0.72 million with a cumulative effect of change in accounting principle adjustment charge to net earnings of $0.17 million in fiscal 2003. Environmental rehabilitation costsWhere a related asset is not easily identifiable, environmental rehabilitation costs which are based on the Group’s interpretation of current environmental and regulatory requirements are accrued as and when tailings are deposited. The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances. Based on current environmental regulations and known rehabilitation requirements, management has included its best estimate of these obligations in its rehabilitation accrual.  Environmental liabilities other than rehabilitation costs which relate to liabilities from specific events are accrued when they are known, probable and reasonably estimable. 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, N.M. Rothschild in Australasia (for the Tolukuma Section) and AGR Matthey in Papua New Guinea (for Porgera), 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 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 their fair value are recognized in the statement of operations, currently. Derivative instruments are not entered into for trading purposes. Pension plans and other employee benefitsPension plans, which are multi-employer plans, in the nature of defined contribution plans, are funded through annual contributions. Refer Note 23. In addition, the Group makes long-service awards to certain eligible employees, based on qualifying ages and levels of service. Due to the nature of the award and the uncertainty surrounding the ultimate payment of the long-service award, no provision is made for potential payment and the Group expenses such costs as they are incurred. Refer Note 23. 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. Refer Note 23.


3. SIGNIFICANT ACCOUNTING POLICIES(continued) 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 term of the debt, to interest expense using the effective interest rate 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 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 2005, 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 $7.8 million and $nil, were considered in determining the diluted (loss)/profit per share. In fiscal 2004 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 $3.6 million and $nil, were considered in determining the diluted loss per share. In fiscal 2003 the shares underlying the options allocated in terms of ESOS, and their respective impact on the net (loss)/profit applicable to common stockholders, of $2.6 million and $nil, were considered in determining the diluted loss per share. In fiscal 2005, 2004 and 2003, a loss applicable to common stockholders of $81.8 million and $58.9 million, and a profit of $14.0 million, respectively, was recorded. As a result of the losses recorded in fiscal 2005 and 2004, the adjustments for potential dilutive shares were anti-dilutive. Stock-based compensation plansAt June 30, 2005, the Company has in place an Employee Share Option Scheme, which is described more fully in Note 23. The Group has adopted the disclosure only provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” or SFAS No. 123,  and  SFAS No. 148,  “Accounting for Stock-Based Compensation Transition and Disclosure and amendment of SFAS No. 123,” and applies Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” or APB Opinion No. 25, and related Interpretations, with respect to its accounting for its employee based compensation plan. The difference between the option strike price and the prevailing market value of the share at grant date is recorded as an expense over the vesting period. In accordance with APB Opinion No. 25  and  related  Interpretations,  $1.0 million,  (2004: $2.3 million; 2003: $4.3 million) of stock-based compensation cost was recognized as an expense for the year ended June 30, 2005.


3. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 Stock-based compensation plans(continued)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 (thousands except for earnings per share information):
  Year ended
 Year ended
 Year ended
  June 30,
 2005
 June 30,
 2004
 June 30,
 2003
      
 - add back: stock-based compensation costs included in statement of operations, net of related tax effects
  
 - less:  total stock-based compensation costs determined under fair value based method, net of related tax effects
  
  
 Basic (loss)/profit per share- as stated (cents)
 
   
       
   
  
 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.
 
 ComparativesComparatives have been reclassified, where necessary to conform to the current year’s presentation.
 
 Recent pronouncementsSFAS No. 123R, “Share-Based Payment”In December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS No. 123 (revised 2004), “Share-Based Payment”, to focus primarily on accounting for transactions where an entity obtains employee services in share-based payment transactions and to eliminate the alternative of applying the intrinsic value measurement provisions of APB Opinion No. 25 to stock compensation awards issued to employees. The new standard requires enterprises to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is to be recognized over the period during which an employee is required to provide service in exchange for the award.
 
 The Company has continued to apply APB Opinion No. 25 and will adopt the provisions of SFAS No. 123R effective July 1, 2005. Under SFAS No. 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost, and the transition method to be used at date of adoption. The transition methods include prospective and retroactive adoption options. Under the retroactive options, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be  recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS No. 123R; the retroactive methods would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. The Company is evaluating the requirements of SFAS No. 123R, and expects that the adoption of SFAS No. 123R may have a material impact on consolidated results of operations and earnings per share. The Company has not yet determined the method of adoption or the effect of adopting SFAS No. 123R, and also has not determined whether the adoption will result in amounts that are similar to the current pro forma disclosures under SFAS No. 123.


3. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 Recent pronouncements(continued)SFAS No. 151, “Inventory Costs, an amendment to Accounting Research Bulletin No. 43, Inventory Pricing”In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment to Accounting Research Bulletin No. 43, Inventory Pricing”.The amendments made by SFAS No. 151 clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current period charges and require the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities.
 
 The provisions of this standard are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. SFAS No. 153, “Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29”In December 2004, the FASB issued SFAS No. 153, “Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29, Accounting for Non-monetary Transactions.” The statement eliminates the exception from fair value measurement for non-monetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29 and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 specifies that a non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange.
 
 The statement is effective for all fiscal periods beginning after June 15, 2005. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.
 
 SFAS No. 154, “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and SFAS No. 3”In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,” to replace APB Opinion No. 20, by revising the accounting treatment and reporting requirements for all voluntary changes in accounting principles. APB Opinion No. 20 required that the cumulative effect of the change in accounting principle be included in net income. Under the new statement, the change in accounting principle is applied retrospectively (as if the principle had always been used) to prior period’s financial statements, hence revising the comparative amounts. The statement also specifically requires that changes in the method of depreciation, amortization and depletion for long-lived, non-financial assets be accounted for as a change in estimate affected by a change in accounting principle.
 
 SFAS No. 154 is effective for accounting changes and corrections of errors occurring in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.
 
 EITF Issue 03-13, “Applying the Conditions in Paragraph 42 of FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, in Determining Whether to Report Discontinued Operations”In November 2004, the EITF of the FASB reached a consensus on Issue 03-13 on evaluating whether the criteria in paragraph 42 of Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets, have been met for the purposes of classifying the results of operations of an entity that either has been disposed or classified as held for sale as discontinued operations.
 
 The consensus stated that the criteria in paragraph 42 should only be applied to a component of the enterprise that is either disposed of or classified as held for sale in fiscal periods beginning after December 15, 2005. The Company does not expect the adoption of this EITF to have a material impact on its consolidated financial statements.
 
 EITF 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 pronouncement on its consolidated financial statements.


4. ACQUISITION AND DISPOSAL OF BUSINESSES 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 21), in final settlement of the purchase price determined on July 30, 2004. The excess paid over the net asset value of Emperor


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 (comprising the Buffels and Harties Sections) 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 in connection with the provisional liquidation were as follows:
  $'000


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
         Fair value of net assets at date of acquisition
  50.25% thereof
          Settled by way of cash and cash equivalents
  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.


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
                   Fair value of attributable net assets at date of acquisition (20% interest)
  Attributable net assets at date of acquisition
      Settled by way of cash and cash equivalents
      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 21), 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. 2003 acquisitionsThe Group made no acquisitions during the year.


4. ACQUISITION AND DISPOSAL OF BUSINESSES(continued) 2003 disposals Crown Gold Recoveries (Pty) LimitedEffective July 1, 2002, the Company engaged in a transaction consistent with its black economic empowerment strategy by entering into a share purchase agreement with the Industrial Development Corporation of South Africa, or IDC, and Khumo Bathong Holdings (Pty) Limited, or KBH. Under this share purchase agreement, the Company sold 57% of its interest in Crown Gold Recoveries (Pty) Limited, or CGR, to IDC and 3% of its interest in CGR to KBH for a total consideration of $11.7 million, and realized a profit of $5.3 million.  KBH obtained an option to purchase IDC's shares in CGR. IDC and KBH also each purchased their respective share of three shareholder loans, aggregating $21.0 million owed by CGR to the Company.  As part of this transaction, the Company loaned KBH $0.7 million to fund that entity's initial purchase of the 3% interest in CGR. The loan bears interest at the prime rate of The Standard Bank of South Africa on overdraft plus 3% per annum. This loan has a term of five years from July 1, 2002 and is repayable on demand. This loan was secured by a pledge of 49,928,824 shares of ERPM held by KBH. However, since the acquisition of ERPM by CGR, the loan is no longer secured. As of June 30, 2004, the loan has been impaired (Refer Note 15). Shortly thereafter, KBH chose to exercise its option to purchase all of IDC's interest in CGR. As a result, with effect from July 15, 2002, the share capital of CGR is now owned 40% by the Company and 60% by KBH. Also, as part of this transaction, KBH repaid IDC's portion of the shareholder loans on behalf of CGR. Consequently, CGR now owes 60% of the loans to KBH and 40% of the loans to the Company. As a result of this transaction, CGR is no longer a subsidiary of the Company. The results of operations and the financial position of CGR are no longer consolidated into the Group’s annual financial statements. The Company's remaining 40% interest in CGR is equity accounted as an investment in an associate. The aggregate carrying value of the assets and liabilities disposed as part of this transaction were as follows:
  $'000


5. RELATED PARTY TRANSACTIONS  The Company has related party relationships with its associates 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 DirectorDr. M. P. Ncholo, chairman of Khumo Bathong Holdings (Pty) Limited, or KBH, is also a Non-Executive Director of the Company. Dr. M. P. Ncholo earned $49,439 in board and other fees from the Company during the year ended June 30, 2005 (2004: $22,410). During fiscal 2004, financial assistance was provided by East Rand Proprietary Mines Limited, or ERPM, the Company’s 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 $14,414. At June 30, 2005, this amount was still outstanding in the accounts of ERPM. Transactions with associate companiesDuring the year ended June 30, 2005, the Company earned $0.5 million (2004: $1.0 million and 2003: $1.3 million) in management fees from Crown Gold Recoveries (Pty) Limited, or CGR, and $0.5 million (2004: $2.0 million and 2003: $1.4 million) in management fees from ERPM. At June 30, 2005 CGR owed the Group $34.6 million (2004: $34.3 million), KBH owed the Group $1.2 million (2004: $1.1 million), and ERPM owed the Group $10.6 million (2004: $10.2 million). Interest amounting to $2.7 million (2004: $2.9 million) was payable to the Group on the loans to CGR, $0.1 million (2004: $0.1 million) was payable to the Group on the loans to KBH, and $1.1 million (2004: $0.7 million) was payable to the Group on the loans to ERPM for the year ended June 30, 2005. No interest income on the loans was recorded as it was not considered to be recoverable. No dividends were received from associates in fiscal 2005, fiscal 2004 or fiscal 2003. As of June 30, 2005, the Company has recognized losses generated by CGR and ERPM against these loans and they are therefore carried at nil value (refer Note 15). 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 General Manager: Investor Relations, is Alternate Director to Mr. D.J. Pretorius. The Group currently owns 3% (2004: 10.6%) 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, 2005, the full balance was still outstanding. Consultancy service agreementThe Company entered into a consultancy service agreement with one of its non-executive directors, Mr. N. Goodwin. Under this agreement, Mr. N. Goodwin provided the Company with project management services at the Argonaut Project. This agreement took effect on September 2, 2002. The agreement was for a fixed one year term from September 2, 2002, so long as the Argonaut Project was ongoing. Under this agreement, Mr. N. Goodwin was paid a fee of $400 per day. Mr. Goodwin worked for 128 days under this agreement for a total amount of $51,200. Mr. N. Goodwin resigned as a non-executive director effective January 29, 2003. This agreement was terminated as of February 26, 2003.


5. RELATED PARTY TRANSACTIONS (continued) Western Areas LimitedOn 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    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 received.


5. RELATED PARTY TRANSACTIONS (continued) Laverton Gold NL Laverton Gold NL is 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.  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    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  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.


5. RELATED PARTY TRANSACTIONS (continued) 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. Purchase of 100% of ERPM by CGR  In October 2002, CGR entered into an agreement to acquire 100% of the outstanding share capital of and loan accounts in East Rand Proprietary Mines Limited, or ERPM, for $11.0 million. In connection with this transaction, the Company provided ERPM with a loan of $1.3 million. In addition, an amount of $8.0 million was lent by the Company to CGR which CGR advanced to the then shareholders of ERPM as an interest free loan. CGR received from the shareholders, as security for the loan, a pledge of the entire issued share capital of ERPM and a cession of the shareholders' claim to CGR. The South African competition authorities approved the transaction and the $8.0 million loan is deemed to be part payment of the purchase price of $11.0 million by CGR for the acquisition of the shares and the claims of ERPM. The Company has recognized losses generated by CGR against this loan and the loan is therefore carried at nil value. 6. EMPLOYMENT TERMINATION COSTS
   Year ended
 Year ended
 Year ended
   June 30,
 2005
 June 30,
 2004
 June 30,
 2003
   $'000                 
  $'000                 
  $'000
    
    
    
     (a) On June 28, 2004, the Company entered into a 60-day review period at the Blyvoor Mine designed to restore the operations to 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. (b) 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. During fiscal 2003, two directors retired from active duty. Retrenchment payments of $0.1 million were made to Mr. V. Hoops (HR Director) and $0.4 million to Mr. F. Coetzee (Chief Operating Officer).


7. IMPAIRMENT OF ASSETS
     
       Year
 ended
 Year
 ended
 Year
 ended
   June 30,
 2005
 June 30,
 2004
 June 30,
 2003
   $'000              
  $'000             
  $'000
                            
 
 
 (a) During fiscal 2005, mining properties at the Durban Deep Section were written down by $0.7 million to $2.2 million, being the estimated fair value of these assets. The Company has negotiated the sale of these mining properties and the estimated fair value was based on these negotiations (refer to Note 27). (b) 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 was therefore seen to be irrecoverable. In addition, funds advanced to Khumo Bathong Holdings (Pty) Limited were impaired as the most significant asset owned by this entity is its 60% interest in CGR and ERPM, which were experiencing liquidity problems in fiscal 2004. (c) As a result of the losses recorded by Net-Gold Services Limited, goodwill recorded on the acquisition was impaired in fiscal 2004 (refer Note 16).


8. DEFERRED INCOME AND MINING TAX
   Year
 ended
 Year
 ended
 Year
 ended
   June 30,
 2005
 June 30,
 2004
 June 30,
 2003
   $'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 2005, 2004 and 2003, the tax rates for taxable mining and non-mining income, for companies that elected the STC exemption were 46% and 38%, respectively. During those same years the tax rates for companies that did not elect the STC exemption were 37% and 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 46% for mining income and 38% for non-mining income. The Company, having chosen not to be subject to the STC exemption, is subject to 37% tax on mining income and 30% for non-mining income. However, with the exception of Blyvoor, all of the Company's South African subsidiaries elected the STC exemption. Any dividends paid by Blyvoor, being a wholly-owned subsidiary of the Company, would be exempt from STC.  Any dividends paid by the Company, to the extent that they are paid out of income from Blyvoor, will be subject to STC. The tax rate for all the Australasian operations is 30%. In July 2005, the above tax rates for taxable mining and non-mining income were amended, due to a revision of corporate tax rates by the South African Government. Tax rates for taxable mining and non-mining income for companies that elected the STC exemption are 45% and 37%, respectively. The tax rates for taxable mining and non-mining income for companies that did not elect the STC exemption are 35% and 29%, respectively. The Company does not expect the change in tax rates to have a material impact on its financial statements.


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 37% or 46% (2004: 37% or 46%; 2003: 37% or 46%), while the Australasian deferred tax has been provided at the Australian statutory tax rate of 30% (2004: 30%; 2003: 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,
 2005
 June 30,
 2004
 June 30,
 2003
   $'000             
  $'000              
  $'000
                                                         (b) Deferred income and mining tax liabilities and assets:
  June 30,
 2005
 June 30,
 2004
   $'000              
  $'000
 South Africa


8. DEFERRED INCOME AND MINING TAX(continued)
 
  June 30,
 2005
 June 30,
 2004
   $'000              
  $'000
 Australasia
                                                                        Total


8. DEFERRED INCOME AND MINING TAX(continued) 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 $7.0 million as of July 1, 2002. During the years ending June 30, 2003, 2004 and 2005, the valuation allowance increased by $75.2 million and $14.2 million and decreased by $65.9 million, respectively. These movements include foreign exchange differences. The decrease in fiscal 2005 is impacted by the elimination of the deferred tax asset and related valuation allowance of the discontinued operation. As at June 30, 2005 and June 30, 2004 the Group had estimated tax losses carried forward consisting of:
    Unredeemed
    capital
   Tax losses
 expenditure
   2005                          
  2004
 2005
 2004
   $'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 $6.0 million at June 30, 2005, by DRD (Isle of Man), in Isle of Man, Porgera and the Tolukuma Section in Papua New Guinea, and other foreign entities would result in income and foreign withholding taxes of approximately $1.8 million.


9. LOSS FROM DISCONTINUED OPERATION The results of Buffelsfontein Gold Mines Limited from July 1, 2002 to March 22, 2005 and the gain on disposal are reported as discontinued operation. The Group's consolidated statements of operations for the years ending June 30, 2004 and June 30, 2003 have 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, 2005
 June 30, 2004
 June 30, 2003
  $'000                       
  $'000                      
  $'000


10. RECEIVABLES
    
      June 30,
 2005
 June 30,
 2004
   $'000             
  $'000
                                           Current receivables
 
   Non-current receivables
 
           Total receivables
                   June 30,
 2005
 June 30,
 2004
 June 30,
 2003
 Reconciliation of allowances for doubtful debts - related parties
 $'000              
  $'000             
  $'000
                   
       June 30,
 2005
 June 30,
 2004
 June 30,
 2003
 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 CGR (refer Note 4). These loans had been fully provided for in fiscal 2004.


11. INVENTORIES
          June 30,
 2005
 June 30,
 2004
   $'000              
  $'000
                           
 
 12. MINING ASSETS
   June 30,
 2005
 June 30,
 2004
   $'000              
  $'000
     Mining properties, mine development costs and mine plant facilities and equipment
                                                                  Certain assets, with a net book value of $10.9 million, have been pledged as security for long-term borrowings. Refer to Note 20.


12. MINING ASSETS(continued) Included in mining assets are deferred stripping costs as follows:
  June 30,
 2005
 June 30,
 2004
  $'000
 $'000
 Deferred stripping costs
                        13. NON-CURRENT ASSETS
      June 30,
 2005
 June 30,
 2004
   $'000 $'000
                                        (a) These investments are classified as available for sale, and are accounted for at fair value. Unrealized gains and losses related to investments that are included in accumulated other comprehensive loss are summarized below:
   June 30,
 2005
 June 30,
 2004
   $'000 $'000
       -                
  -
 Realized gains of $0.5 million, $0.1 million and $0.2 million were recorded in fiscal 2005, fiscal 2004 and fiscal 2003 respectively. (b) Unlisted investments comprise investments in various unlisted companies, the fair value of which is not directly available from 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. (c) Amounts have been contributed to irrevocable trusts under the Company's control. The monies in the trust are invested primarily 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:
 
  June 30, 2005
 June 30, 2004
 
  percentage held
 percentage held
     
 Together with Placer Dome Inc. 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.
 
 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 (from date of acquisition):
  June 30,
 2005
 June 30,
 2004
 Statement of operations
 $'000
 $'000
 Revenues
   Costs and expenses
            Other operating expensesDepreciation and amortization
      Net operating income
         Profit before tax
      Net profit
   Balance sheetCurrent assets
               Mining assets
   Other assets
      Total assets
   Current liabilities
            Non-current liabilities
         Net assets


15. INVESTMENTS IN ASSOCIATES
  June
 30,
 2005
 June 30,
 2004
  Country of incorporation
 percentage
 held
 percentage
 held
            June 30,
 2005
 June 30,
 2004
   $'000                 
  $'000
                                                      On July 30, 2004, the Company's shareholding in Emperor Mines Limited, or Emperor, increased from 19.78% to 45.33% (refer to Note 4). The Company has 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. The amount included for the year ended June 30, 2003, represents 14.15%, from January 2003 to March 2003, and 19.81%, from April 2003 to June 2003, of Emperor’s losses, 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. The fair value of Emperor was calculated using discounted future cash flows expected to be derived from the associate. At June 30, 2005 and June 30, 2004, 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
 June 30,
 2004
 $’000
             Market value of the Company’s investment in Emperor (based on the quoted market price at June 30, 2005)
    On July 1, 2002, the Company sold 60% of its wholly owned subsidiary company, Crown Gold Recoveries (Pty) Limited, or CGR, to Khumo Bathong Holdings (Pty) Limited in a transaction consistent with the Company's black economic empowerment strategy (refer Note 4). In fiscal 2002, the results of this company had been consolidated into the results of the Group. Effective July 1, 2002, the Company’s remaining 40% interest has been treated as an investment in an associate and equity accounted. As at June 30, 2005 and
  2004 the investment in CGR is carried at $nil.


16. GOODWILL
         June 30,
 2005
 June 30,
 2004
   $’000            
  $’000
                     
 17. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
      June 30,
 2005
 June 30,
 2004
   $'000             
  $'000
                    
 18. DERIVATIVE INSTRUMENTS
      June 30,
 2005
 June 30,
 2004
   $'000             
  $'000
                       
 (a) The gold for electricity contract was closed out on April 28, 2005, for $3.6 million. In fiscal 2004, the amount comprised the fair value of the gold for electricity contract entered into by the Company. Changes in fair value were recorded as profit/(loss) on derivative instruments in the statement of operations. The fair value represented the difference between the contract price that was agreed on the date of the transaction and the forward price on June 30, 2004, (refer to Note 24 for further details of quantities and the timing of settlement). The liability of $3.1 million reflected the fair value as at June 30, 2004, when the gold price was R2,451 per ounce against an average contract price of R2,256 per ounce. 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 was the price that was agreed on the date of the transaction for a determined period, and the arithmetic average of the London PM fix for each business day in the calculation period. During fiscals 2005, 2004 and 2003, the realized and unrealized (loss)/gain included in profit/(loss) on derivative instruments for this instrument amounted to losses of $0.4 million (realized) and $1.4 million (unrealized), and a gain of $43.8 million  (unrealized), respectively.
  b) This amount reflects the fair value of the interest rate swap agreement that was entered into to manage the interest rate and currency risk on the bi-annual interest payments of the convertible notes which were issued in fiscal 2003. The interest rate swap has not been accounted for as a hedge. Changes in fair value have been recorded as profit/(loss) on derivative instruments in the statement of operations. The fair value represents the difference between the fixed coupon rate of 6% per annum and the forward Johannesburg Inter-bank Acceptance Rate, or JIBAR, plus 200 interest basis points together with the spot and forward US$ exchange rate with reference to the coupon amount payable bi-annually. At June 30, 2005, the six month JIBAR rate was 6.929%. During fiscals 2005, 2004 and 2003, the realized gain/(loss) included in (loss)/profit on the interest rate swap amounted to a gain of $0.2 million, a loss of $1.4 million and a loss of $1.5 million, respectively. During fiscals 2005, 2004 and 2003, the unrealizedgain/(loss)
  included in (loss)/profit on the interest rate swap amounted to $nil, a loss
  of $0.3 million and $nil, respectively.


19. 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 $25.8 million at June 30, 2005 (2004: $39.2 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,
 2005
 June 30,
 2004
 
  $'000              
  $'000
 Provision for asset retirement obligations
                                Provision for environmental rehabilitation costs
                            Provision for environmental rehabilitation
 
 22,596
 39,107
 The provision for asset retirement obligations relates to expected costs associated with the demolition of gold plants, shaft headgear and shaft infrastructure. The provision for environmental rehabilitation costs relates to the expected costs associated with the revegetation of tailings dams, revegetation of rock dumps and the rehabilitation of open cast areas. Included in the net book value of the mining asset balance are asset retirement costs, relating to the following mines:
   June 30,
 2005
 June 30,
 2004
   $'000              
  $'000


20. LONG-TERM LOANS
   June 30,
 2005
 June 30,
 2004
   $'000              
  $'000
   
 
   
 
 Secured
  
 
           Unsecured
                     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, 2005, the interest rate on this loan stood at 9.5% per annum and $4.0 million had been drawn down. The loan is repayable in 48 monthly installments starting from August 2002. Repayments were suspended in January 2005 until January 2006, with the final payment due in July 2007. The loan is secured over the Blyvoor metallurgical plant, with a net book value of $10.9 million at June 30, 2005. 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. (b) On October 14, 2004, DRD (Isle of Man) entered into a facility of $15.0 million with Investec Bank (Mauritius) Limited, or Investec (Mauritius), of which $10.0 million has been drawn down. The facility may 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 may be used for any other purpose. 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 is secured by DRD (Isle of Man)’s shares in Emperor Mines Limited, DRD (Porgera) Limited and Tolukuma Gold Mines Limited. The loan agreement prohibits the Company from disposing of or further encumbering the secured assets. The facility restricts 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 the Company’s interest and principal payment obligations under the facility by requiring that the Company hold, in a debt servicing account, sufficient cash to cover its quarterly principal payments. Any funds in excess of these repayment requirements may be transferred to the Company. Investec (Mauritius) has 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.


20. LONG-TERM LOANS(continued) (c) On November 12, 2002, the Company issued $66,000,000 of 6% Senior Convertible Notes due 2006, in a private placement. The 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 the 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.  To date, no notes have been converted. In connection with the delay in the registration of the notes, the Company incurred liquidated damages payable to the note holders in the amount of $1.2 million, which have been included in interest expense in the statement of operations for fiscal 2003. The notes are presented in the consolidated balance sheet as follows:
   June 30,
 2005
 June 30,
 2004
   $'000              
  $'000
          
   
   
   
   
   
   
           (1) The conversion option embedded in the Senior Convertible Notes is accounted for as an embedded derivative instrument under SFAS No. 133. The option does not qualify for hedge accounting. The embedded derivative instrument is carried at fair value, suchfair
  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.


20. LONG-TERM LOANS(continued) (2) The issuance costs relating to the convertible loan note have been capitalized, and are being amortized over the life of the instrument.  (3) Interest on the notes is calculated on the effective yield basis, at an effective rate of 16.08% per annum. Included in unrealized foreign exchange gains/(losses) is a loss of $4.4 million, and a gain of $10.6 million and $11.2 million, in fiscals 2005, 2004 and 2003, respectively, relating to foreign exchange movements on the convertible note. (d) On June 24, 2004, Investec Bank Limited, or Investec, granted the Company a R100.0 million (June 30, 2004: $15.9 million) loan facility. The facility bore interest at the three-month Johannesburg Inter-bank Acceptance Rate, or JIBAR, plus 300 basis points. As at June 30, 2004, the interest rate was 10.95%. The Company could elect to repay the facility in cash or by the issue of its ordinary shares, valued at the market price of the shares on the date of settlement. The balance owing at June 30, 2004, including additional amounts drawn down in fiscal 2005 totaling $13.1 million, were settled on September 30, 2004, through the issue of 7,850,657 of the Company’s ordinary shares. Long-term loans are scheduled for repayment in the 12 months to:
   $'000
                June 30,
 2005
 June 30,
 2004
 Currencies in which long-term loans are denominated are as follows:
  $'000              
  $'000
             The Group has undrawn committed borrowing facilities of $nil (June 30, 2004: $2.9 million) from the Industrial Development Corporation and bank overdraft facilities of $1.4 million (June 30, 2004: $1.8 million) of which $1.4 million (June 30, 2004: $1.8 million) had been utilized at year-end. On October 14, 2004, the Company agreed a third $15.0 million loan facility with Investec Bank (Mauritius) Limited. As at June 30, 2005, $10.0 million had been drawn down and $5.0 million was available under this facility. On December 10, 2004, the Company agreed a fourth $15.0 million loan facility with Investec. As at June 30, 2005, $9.0 million had been drawn and subsequently repaid through the issue of 8,060,647 of the Company’s shares and $6.0 million was still available under this facility.


21. STOCKHOLDERS EQUITY Ordinary shares: 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 the 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). June 30, 2003 During the year ended June 30, 2003, the Company issued 4,794,889 shares at market value to Khumo Bathong Holdings (Pty) Limited in exchange for gross cash proceeds of $6.8 million. 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. The Company has lodged an application for a prospecting right in respect of the Argonaut area, which is pending at the Department of Minerals and Energy. 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.


22. (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, 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. (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, 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.


22. (LOSS)/PROFIT PER SHARE (continued)
  For the year ended June 30, 2003
  Profit
 Per-share
  $000  Shares
 amount
  (Numerator) (Denominator) $
 cents
     Basic profit per share
            Net profit from continuing operations before cumulative effect of accounting change
                 Fully diluted profit per share
       Weighted average dilutive number of shares underlying Senior Convertible Notes
       Diluted net profit from continuing operations applicable to common stockholders                                                                                                                                  
  11,361
          Diluted net profit from continuing operations before cumulative effect of accounting change


23. 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 either of the above-mentioned funds. Fund contributions by the Group for the year ended June 30, 2005 amounted to $7.4 million (2004: $8.7 million; 2003: $6.4 million). Post-retirement benefits other than pensions Prior to the Company's acquisition of Blyvooruitzicht Gold Mining Company Limited, or 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. Currently, no post-retirement benefits other than pensions are available to workers. 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 accumulated benefit obligation at June 30, 2005, is not significant. During fiscal 2005, the Company expensed $0.3 million (2004: $0.2 million; 2003: $0.1 million) relating to the long-service awards.


23. 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 4.4% 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 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 2005, 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, 2005, the average price per share for outstanding options is $2.09 and average price per share for exercisable options is $2.64.


23. EMPLOYEE BENEFIT PLANS(continued) For the purposes of the pro-forma disclosures in terms of SFAS No. 123, the weighted average grant date fair value of the above options granted in fiscal 2005 at exercise prices which exceeded the market price of the stock on grant date was R0.83 (2004: R3.31; 2003: Rnil). The weighted average grant date fair value of the above options granted in fiscal 2005 at exercise prices, which were less than the market price of the stock on grant date, was R2.33 (2004: R4.37; 2003: R8.07). 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, 2005     
  June 30, 2004     June 30, 2003
           
    
     
 During fiscal 1998, the Company also issued certain options which were exercisable immediately, but which vested over a period of twelve 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)
 
                  For the purposes of the pro-forma disclosures in terms of SFAS 123, the weighted average grant date fair value of the above options granted in 1998 was R2.67. These options had an exercise price equal to the market price of the stock on grant date.  The grant date fair value of these options was determined using a Black-Scholes pricing option model, applying the following assumptions:
      1998


23. EMPLOYEE BENEFIT PLANS(continued) 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, 2005, the average price per share for outstanding options is $2.37 and average price per share for exercisable options is $2.37.
 
 For the purposes of the pro-forma disclosures in terms of SFAS No. 123, the weighted average grant date fair value of the above options granted in 2002 at exercise prices, all of which were less than the market price of the stock on grant date, was R19.08.  The grant date fair value of these options was determined using a Black-Scholes pricing option model, applying the following weighted average assumptions:
 
     2002


23. EMPLOYEE BENEFIT PLANS(continued) During fiscal 2002, the Company issued certain options, which were exercisable immediately. 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)
              
 For the purposes of the pro-forma disclosures in terms of SFAS 123, the weighted average grant date fair value of the above options granted in 2002 at exercise prices, all of which were less than the market price of the stock on grant date, was R6.20. The grant date fair value of these options was determined using a Black-Scholes pricing option model, applying the following weighted average assumptions:
      2002
                        The following tables summarize information relating to all employee stock options outstanding as June 30, 2005:
   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)


24. 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 and Papua New Guinea, 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, interest, liquidity and credit risks. The Company entered into transactions, which make use of derivative instruments, to economically hedge certain exposures. These instruments include interest rate swaps 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. 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.” The Group does not hold or issue derivative financial instruments for speculative purposes. 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 pays Eskom the standard electricity tariff for all energy it consumes, including the 75 GWh per month specified in the contract. This contract was to expire in September 2005. In addition, every 12 month-period starting in October the Company adjusts the amounts paid in that period in accordance with an established formula based on the gold price. The gold price adjustment is 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 does not meet the definition of a derivative instrument and therefore it does not have to be carried on the 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.  As discussed in Note 18, the contract was closed out on April 28, 2005, at a cost of $3.6 million. The fair value of the gold for electricity contract was a liability of $3.1 million as at June 30, 2004. The fair value reflected the difference between the price that was agreed on the date of the transaction and the forward price on June 30, 2004. Therefore, the liability of $3.1 million reflected the loss as at June 30, 2004, when the gold price was R2,451 per ounce against an average contract price of R2,256 per ounce.


24. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
    Put options boughtPut options bought refer to the right, but not the obligation to sell a predetermined amount of gold at a predetermined price on a predetermined date. During fiscal 2003, the remaining put options were closed out.  This resulted in a realized gain of $7.1 million.  Included in profit/(loss) on derivative instruments is $nil for fiscal 2004, and a profit of $9.5 million for fiscal 2003, relating to this instrument. Other positionsThe Company had entered into a gold rate lease swap and call option 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 and $280/oz, 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 expire 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 2005, a loss of $3.2 million for fiscal 2004 and a profit of $40.9 million for fiscal 2003, relating to these instruments. Concentration of credit risk The Company believes that its financial instruments do not represent a concentration of credit risk, because the Group deals with a variety of major banks and financial institutions located in South Africa, Australia and Papua New Guinea, after evaluating the credit ratings of the representative financial institutions. Furthermore, its debtors and loans are regularly monitored and assessed for recoverability. Where it is appropriate to raise a provision, an adequate level of provision is maintained.  In addition, 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 Tolukuma mining operation delivers its gold to one customer, N M Rothschild (Australia) and receives proceeds within two days. The concentration of credit risk in Australia is mitigated by the reputable nature of the customer and the settlement of the proceeds within two days.


24. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
     The Porgera mining operation delivers its gold to AGR Matthey (Papua New Guinea) who refines the gold and then delivers it to the Bank of Western Australia Limited at a price negotiated by the Company.  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.  Foreign currency riskThe Group's functional currency for the South African operations is the South African Rand and for the Papua New Guinea operations it is the Papua New Guinea Kina.  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 and Papua New Guinea.  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 and Kina.   The Company's results are positively affected when the Dollar strengthens against these foreign currencies and adversely affected when the 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 20). 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. 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 agreement 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 20). 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 is November 2006. The Company believes that the counterparty to this agreement, being The Standard Bank of South Africa Limited, is a financially sound institution and the credit risk for non-performance is not significant. As discussed in Note 18, the fair value of the interest rate swap agreement was a liability of $0.6 million as at June 30, 2005. Labor riskApproximately 70% of the labor force, at our South African Operations, are members of labor unions. The majority of the union members are blue-collar employees. The unions negotiate two year wage agreements which are binding on employees in the respective bargaining units, the largest of which consists of occupational groupings of mainly blue collar workers in the organization. The new wage agreement for Blyvoor is valid from July 1, 2005 to June 30, 2007. As at October 31, 2005, wage agreements were still being negotiated at Crown and ERPM. The levels of unionization for operations outside South Africa vary. It is mostly contained amongst blue-collar workers and membership is below 50%.


24. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
    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,
 2005
 June 30,
 2005
 June 30,
 2004
 June 30,
 2004
 
 $'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 carrying value 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. 25. COMMITMENTS AND CONTINGENT LIABILITIES
 
 June
  30,
 2005
 June 30,
 2004
 
 $'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 or results of operations.


25. COMMITMENTS AND CONTINGENT LIABILITIES(continued) 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 in the Southern District of New York. The Company expects that a consolidated amended complaint will be filed on behalf of a group of lead plaintiffs selected by the Court to represent the putative class of plaintiffs alleged in the complaints. The Company anticipates that a response to such a complaint will be required some time in early 2006. To date, neither the Company nor the individual defendants have been formally served with any complaint regarding these matters. The actions are allegedly filed on behalf of purchasers of the Company’s shares during two purported class periods spanning 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:
       Based on the Company’s review of the complaints, management believes the lawsuits are without merit and intends to vigorously defend the Company and its officers named in the complaints. The Company is not currently in a position to estimate the extent of any losses that may result from the securities class action. Tax on earnings of Company officersThe South African Revenue Services, or SARS, conducted a payroll audit on the Company’s payroll during 2002. At the time the Company, acting on professional advice, did not deduct tax from some of the earnings of certain of its officers, who were provisional tax payers. SARS took the view that the Company was in fact obliged to have made these deductions and called for a full disclosure of all payments for the tax years 1999, 2000, 2001, 2002 and 2003 in respect of the earnings of Mr. R.A.R. Kebble and Mr. M.J. Prinsloo. If it is established that these officers had failed to declare and pay taxes on their earnings during these tax years, SARS may have recourse for arrear taxes against the Company in terms of Section 5(2) of the South African Income Tax Act, 1962 as amended. Whilst the Company is aware that its possible exposure could be up to R25.0 million ($3.7 million), it is, in view of the fact that the tax records of the aforementioned individuals are protected by statutory confidence, not yet possible to determine the full extent of the exposure, if any, that the Company faces. Whilst the Company is aware that SARS have engaged the aforementioned individuals personally, to date no tax assessments have been made against the Company.


26. 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, 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
 68,370         
  81,538
 -
 -        
  149,908         82,793        
  32,446                
  -
 115,239
 265,147
 (81,538)
 183,609
 
 
 
 
 
 
 
 
 
 
 
 
 
 Depreciation and amortization
 (2,716)           
  (971)
 -            
  2,773            (914)
 (11,613)
 (3,336)        
  1,095          (13,854)
 (14,768)
 971
 (13,797)
 
 
 
 
 
 
 
 
 
 
 
 
 
 Production costs
 (73,814)    
  (100,695)
 -         
  (1,218)     (175,727)       
  (36,210)      (25,278)                
  -
 (61,488)
 (237,215)         
  100,695
 (136,520)
 
 
 
 
 
 
 
 
 
 
 
 
 
 Results
 
 
 
 
 
 
 
 
 
 
 
 
 Net operating income/(loss)
 (11,917)
 (62,714)
 (486)
 (8,20 3 )        
  (83,3 20 )         29,808
 245       
  (2,850)            27,203
 (56,11 7 )            
  62,714           6,59 7
 (Loss)/profit after tax
 (12,567)
 (62,464)
 (355)
 (20,57 4 )
 (95,9 60 )        
  24,028           (718)
 (27,242)          
  (3,932)       (99,89 2 )
 62,464      
  (37,42 8 )
 
 
 
 
 
 
 
 
 
 
 
 
 
 Balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
 Mining assets
 46,112
 -
 152
 1,384
 47,648        
  66,238           7,344            
  940            74,522
 122,170
 
 
 Total assets
 54,665
 -
 1,971
 20,527
 77,163      
  11 7 , 788 17,259       
  26,047          16 1 , 0 9 4 2 38 , 257
 
 
 Net current assets/(liabilities)
 (6,715)
 -
 (35)
 6,697
 (53)
 ( 1 , 262)
 6,371
 6,541
 1 1 , 6 5 0
 1 1 , 59 7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Other information
 
 
 
 
 
 
 
 
 
 
 
 
 Capital expenditures
 729
 3,524
 -
 37
 4,290
 17,174          
  3,399
 -           
  20,573          24,863           
  (3,524)         21,339
 Impairment of assets
 -
 39,451
 -              
  664
 40,115                  
  -                 
  -                 
  -
 -
 40,115
 (39,451)             
  664
 Total number of employees
 
 
 
 
 3,481
 
 
 
 824
 4,305
 
 
 The South African operations deliver their gold to Rand Refinery Limited, which acts as their agent in the sale of gold bullion. The  Tolukuma mining operation and Porgera  mining operation also has one customer for their gold bullion, namely N M Rothschild and AGR Matthey, respectively.


26. 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
 90,066     
  130,036
 -
 -        
  220,102         60,445         
  32,743               
  -
 93,188
 313,290
 (130,036)
 183,254
 
 
 
 
 
 
 
 
 
 
 
 
 
 Depreciation and amortization
 (2,643)      
  (4,160)
 -            
  1,199         (5,604)       
  (9,260)         (7,340)       
  (7,931)          (24,531)     
  (30,135)              
  4,160
 (25,975)
 
 
 
 
 
 
 
 
 
 
 
 
 
 Production costs
 (90,366)  
  (134,465)
 -          
  (1,189)    (226,020)      (31,650)      
  (19,821)                
  -
 (51,471)
 (277,491)         
  134,465
 (143,026)
 
 
 
 
 
 
 
 
 
 
 
 
 
 Results
 
 
 
 
 
 
 
 
 
 
 
 
 Net operating income/(loss)
 (8,980)
 (21,523)
 (1,539)
 (26,890)      
  (58,932)         18,631         
  2,402             
  266             21,299      
  (37,633)
 21,523      
  (16,110)
 (Loss)/profit after tax
 (15,450)
 (20,804)
 (1,403)
 (20,157)
 (57,814)         
  9,062           2,294
 (12,433)         
  (1,077)       (58,891)
 20,804      
  (38,087)
 
 
 
 
 
 
 
 
 
 
 
 
 
 Balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
 Mining assets
 48,518
 27,689
 -
 6,164
 82,371     
  61,741           7,000            
  5,831           74,572
 156,943
 
 
 Total assets
 31,572
 79,368
 4,245
 103,681
 218,866     
  19,204           9,571          
  35,094           63,869
 282,735
 
 
 Net current (liabilities)/assets
 (59,902)
 (157,709)
 (19,036)       
  298,902           62,255   
  (25,102)        (1,651)
 (60,495)       
  (87,248)
 (24,993)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Other information
 
 
 
 
 
 
 
 
 
 
 
 
 Capital expenditures
 9,151
 5,511
 -
 89
 14,751         
  8,723         3,442
 1          
  12,166
 26,917           
  (5,511)        21,406
 Impairment of assets
 -
 1,276
 -
 2,990             
  4,266
 -
 -                    
  -
 -
 4,266           
  (1,276)          2,990
 Total number of employees
 
 
 
 
 12,986
 
 
 
 751
 13,737
 
 
 The South African operations deliver their gold to Rand Refinery Limited, which acts as their agent in the sale of gold bullion. The Tolukuma mining operation and Porgera  mining operation also has one customer for their gold bullion, namely N M Rothschild and AGR Matthey, respectively.


26. GEOGRAPHIC AND SEGMENT INFORMATION (continued)
 
 Year ended June 30, 2003
 
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 $’000
 
 Blyvoor Mine
 North West
 Mine
 West Wits
 Mine
 Other
 Total South
 African
 operations
 Australasian
 operations
 Total
 operations
 Discontinued
 operation
 Total
 continuing
 operations
 
 
 
 Revenues
 81,753  151,923  4,796
 -  238,472  22,870  261,342  (151,923)  109,419
 
 
 
 
 
 
 
 
 
 
 Depreciation and amortization
 (1,509)  (1,761)  (402)  (369)  (4,041)  (6,561)
 (10,602)  1,761
 (8,841)
 
 
 
 
 
 
 
 
 
 
 Production costs
 (65,240)  (144,598)  (4,859)  (1,557)  (216,254)  (19,105)
 (235,359)  144,598
 (90,761)
 
 
 
 
 
 
 
 
 
 
 Results
 
 
 
 
 
 
 
 
 
 Net operating income/(loss)
 54,713
 2,352
 (80)
 (2,403)  54,582  (4,993)
 49,589  (2,352)
 47,237
 Profit/(loss) after tax
 39,074
 (22,577)  161
 2,173
 18,831
 (4,872)
 13,959
 22,577
 36,536
 
 
 
 
 
 
 
 
 
 
 Balance sheet
 
 
 
 
 
 
 
 
 
 Mining assets
 38,089
 31,920
 -
 602
 70,611
 12,646
 83,257
 
 
 Total assets
 56,088
 63,530
 20,217
 31,350
 171,185
 36,150
 207,335
 
 
 Net current assets/(liabilities)
 (13,788)
 (24,356)
 1,306
 55,913
 19,075
 (16,656)
 2,419
 
 
 
 
 
 
 
 
 
 
 
 
 Other information
 
 
 
 
 
 
 
 
 
 Capital expenditures
 4,176
 6,375
 -
 170  10,721  2,693
 
 13,414  (6,375)  7,039
 Impairment of assets
 -
 -
 -
 -
 -
 -
 -
 -
 -
 Total number of employees
 
 
 
 
 18,766
 472
 19,238
 
 
 
 The South African operations deliver their gold to Rand Refinery Limited, which acts as their agent in the sale of gold bullion. The Australasian operations also have one  customer for their gold bullion, namely N M Rothschild.  The Australasian operations comprise Tolukuma gold mine and its related corporate structures.


27. SUBSEQUENT EVENTS Simmer and Jack Mines Limited’s acquisition of Buffelsfontein Gold Mines LimitedOn October 6, 2005, the Company concluded an agreement with Simmer and Jack Mines Limited, or Simmer and Jack, for the sale of its shareholding in Buffelsfontein Gold Mines Limited, or Buffelsfontein (in provisional liquidation). The agreement is conditional upon:
  the acceptance by the High Court of South Africa and the majority of Buffelsfontein’s creditors of a scheme of arrangement proposed by Simmer and Jack;
    the Department of Water Affairs and Forestry agreeing to substitute the Company with Simmer and Jack in the underground water pumping directives that currently regulate the proportionate contribution of the surrounding mines to the costs and maintenance of pumping.
 Buffelsfontein, known as the Company’s North West Operations, or NWO, was placed in provisional liquidation on March 22, 2005, following continued financial losses and a massive earthquake on March 9, 2005, which caused irreparable damage to No. 5 Shaft. Simmer and Jack’s scheme of arrangement involves the payment of R45.0 million ($6.7 million) to the provisional liquidators and the fresh appointment of employees without assumption of any accumulated pre-liquidation employee benefits.  Simmer and Jack currently manages NWO, pays its holding costs in terms of an interim agreement with the provisional liquidators and conducts limited mining of surface dumps. It may offset up to R20.0 million ($3.0 million) of its contribution to holding costs against the proposed payment to the provisional liquidators of R45.0 million ($6.7 million).  In exchange for the transfer of its holding in Buffelsfontein, Simmer and Jack paid the Company one Rand, and indemnified the Company against any liabilities or obligations which could arise against it in connection with the environmental rehabilitation of Buffelsfontein, as well as the management and pumping of underground water. Simmer and Jack has the benefit, however, of drawing down against the rehabilitation trust fund which was transferred to the Department of Minerals and Energy upon the provisional liquidation of Buffelsfontein.  The Company remains committed to the R9.0 million ($1.3 million) social fund established to help any NWO employees who may be retrenched as a result of the liquidation and has made a provision for this amount at June 30, 2005. In total, the Company has paid an amount of R47.9 million ($7.7 million), post-liquidation to assist the NWO’s liquidators, most of which was used to pay workers’ wages. The Company remains Buffelsfontein’s largest creditor with approximately R1 billion ($149.6 million) owing. The provisional liquidators of Buffelsfontein are pursuing a valid, but as yet unquantified insurance claim for damage and losses incurred in the March 2005 earthquake. The proceeds of this claim are not included in the scheme proposed by Simmer and Jack. On October 21, 2005, the scheme of arrangement for the acquisition of Buffelsfontein proposed by Simmer and Jack and accepted by the majority of Buffelsfontein creditors, including the Company, 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.Capital development projects at Blyvooruitzicht Gold Mining Company Limited, or BlyvoorTwo projects at Blyvoor, with a total capital cost of R82.8 million ($12.4 million), the re-establishment of mining operations from the No. 2 Sub-Shaft in two phases costing R80.5 million ($12.0 million) and a R2.3 million ($0.4 million) expansion of the Slimes Dam Project, were approved by the Company’s Board of Directors on August 24, 2005.


27. SUBSEQUENT EVENTS(continued) Black Economic Empowerment, or BEE, transaction with Khumo Bathong Holdings (Pty) Limited, or KBHOn July 6, 2005, the Company signed a Memorandum of Understanding with its black economic empowerment partner, KBH, regarding the acquisition by KBH of a 15% stake in the Company’s South African Operations. In addition, on July 20, 2005, the Company acquired, from the Industrial Development Corporation, all of its CGR and ERPM debt through the issue of 4,451,219 shares in the Company, which at the date of issue represented approximately $4.3 million (R29.0 million). On October 27, 2005, the Company’s board of directors approved the black economic empowerment transaction. The transaction has been facilitated by the Industrial Development Corporation, which agreed to a debt restructuring in CGR. The new structure results in
  Khumo Gold SPV (Pty) Limited, or Khumo Gold, which is an affiliate of KBH acquiring, as a first step, 
 a 15% interest in a newly created company, DRDGOLD South African Operations (Pty) Limited, or DRDGOLD SA, which includes 
 ERPM, CGR and Blyvoor. The Company will retain an 85% interest.  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.
  DRDGOLD Limited will subscribe for $4.8 million (R31.8 million) new Khumo Gold
  preference shares. The proceeds from these preference shares will be 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 CGR,
  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). Dr. Paseka Ncholo, the Company’s Non-Executive Chairman, will take over as Executive Chairman of DRDGOLD SA with effect from November 1, 2005. Due to the fact that Dr. Paseka Ncholo is also KBH’s Chairman, the transaction will be a related party transaction. It will therefore be subject to regulatory approvals and to confirmation by an appointed, independent expert and the Company’s audit committee that it is fair and reasonable to the Company’s shareholders. Financing and operating assistance for EmperorThe Company has initiated a financing and operating assistance package to 45.33% owned Emperor. This follows a complete review by the Company of Emperor’s operations. To assist Emperor with its restructuring plan, the Company has agreed to provide a A$10.0 million ($7.6 million) Convertible Loan Facility to Emperor as part of a re-financing package, which includes an agreement with ANZ Bank to restructure Emperor’s existing debt servicing obligations. ANZ Bank has given its consent to the granting of the Convertible Loan Facility and the related security to the Company. Further the Australian Stock Exchange has also granted a waiver of listing rules to permit Emperor to grant such security to the Company on the terms incorporated in the Convertible Loan Facility. The Convertible Loan Facility, which was negotiated on behalf of Emperor by its independent directors, carries an interest rate of 9% per annum and is secured by a first ranking charge over Emperor’s 100% interest in the Tuvatu Gold Prospect in Fiji. The Convertible Loan Facility is repayable upon either receipt of the proceeds expected from the sale of Emperor’s interest in the Tuvatu Gold Prospect, or by December 31, 2007. Emperor has previously announced a conditional sale agreement in relation to the Tuvatu Gold Prospect and expects to receive consideration of approximately A$10.0 million ($7.6 million) on completion of that transaction. The Convertible Loan Facility is convertible, at the Company’s election, into ordinary fully paid shares of Emperor at a conversion price equal to the lower of A$0.30 per Emperor share or the 45 day volume weighted average price of Emperor shares on Australian Stock Exchange prior to the date of conversion. The Convertible Loan Facility was approved by the shareholders of Emperor, other than the Company, on August 29, 2005.  In terms of an operational support agreement, also negotiated on behalf of Emperor by its independent directors, the Company will provide Emperor with management and technical services. Sale of the Durban Deep Section’s mine villageThe Company concluded an agreement with M5 Developments (Pty) Ltd, or M5, on July 21, 2005, in terms of which M5, against payment of a non-refundable fee of R1.5 million ($0.2 million), was granted an option to acquire the Durban Deep Section’s mine village for R15.0 million ($2.2 million). The option was exercised on November 19, 2005 and the option fee will be deemed part payment of the purchase consideration.


27. SUBSEQUENT EVENTS (continued)
 
 Acquisition of a 5% holding in Allied Gold LimitedOn November 11, 2005 the Company acquired a 5% holding in the Australian Stock Exchange listed Allied Gold Limited, or Allied, for A$3.0 million ($2.3 million).
 
 In a separate transaction, the Company has also undertaken to, pursuant to any existing Allied shareholder electing not to follow its rights, take up not more than 17,420,000 shares, to be issued by Allied to raise an additional A$7.0 million ($5.3 million) at an issue price of A$0,40 ($0.30) per share.
 
  
 The capital raising, which represents approximately 17.5% of Allied's share capital will also be subject to Allied shareholder approval, which Allied has undertaken to seek to obtain by no later than January 20, 2006.
 
 Consolidation of the Company’s offshore operations into Emperor Mines LimitedOn November 16, 2005, the Company concluded a sale and purchase agreement with Emperor, in terms of which Emperor will acquire 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 a 20% interest in the Porgera Joint Venture, a 100% interest in Tolukuma Gold Mines Limited and all of the Company’s exploration tenements in Papua New Guinea.
 
 Implementation of the transaction requires the restructuring of the Company’s offshore operations, whereby DRD (Isle of Man) will transfer the following material assets to the Company’s new wholly-owned subsidiary DRDGOLD (Offshore) Limited, or DRD (Offshore):
 
    an A$10.0 million ($7.6 million) convertible loan facility which DRD (Isle of Man) has advanced to Emperor, in terms of which the Company can elect to convert such debt facility into additional Emperor shares at A$0.30 ($0.23) per Emperor share.
 
 The Company will then sell DRD (Isle of Man) to DRD (Offshore). The restructuring is subject, inter alia, to the following conditions precedent:
 
       
 DRD (Offshore) will then sell DRD (Isle of Man) to Emperor. The purchase consideration is 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 is the effective date, and completion of the transaction. The purchase consideration will be settled by the issue of new Emperor shares to DRD (Offshore) and a portion in cash.
 
  
             
 Upon completion of the transaction and the issue of the new Emperor shares, the Company will hold approximately 90.5% of Emperor. This transaction will be accounted for as a reverse acquisition.
 
 Emperor has announced its intention to raise approximately $15.0 million through the placement of new shares following completion of the transaction. The capital raising would take place in early 2006.


ITEM 19. EXHIBITS
 
                       Registration Rights Agreement between DRDGOLD Limited and CIBC World Markets Corp., dated November 4, 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.
 
    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.


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.
          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.
  Loan Agreement between Bank of South Pacific Limited and Tolukuma Gold Mines Limited, dated November 8, 2001.
   Master Finance Lease between Volvo Truck Finance Australia (Pty) Ltd and Dome Resources N.L., dated October 31, 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 Ltd, dated September 18, 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 October 1, 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.
   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) 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 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, Buffels 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.
  (Mauritius)
  Limited, dated October 14, 2004.


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.
  Memorandum of Understanding 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.
                 
 
   ___________ *


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