Niël Pretorius - CEO Riaan Davel - CFO Jaco Schoeman - Operations Director, Ergo Mining Operations Proprietary Limited

Adrian Hammond - Standard Bank Group Securities Adrian Williams - Avior Capital Alan Cook - JPMorgan Alexandra Wexler - The Wall Street Journal Niël Pretorius: Good morning, everybody. Thank you very much for taking the time to join us here for our results presentation. These are the half-year numbers for the current financial year. While you ponder the terms of the disclaimer, the focus will really be to give you an update on where we are with our new plant. Obviously everybody wants to know a little bit about how do we manage Eskom and the impacts of their inability to provide reliable and sufficient power. And, also the view on the way forward and how we position ourselves for that. For the half year we're very pleased with the way that things panned out towards the end of the half year. You'll recall that the first few months of 2014 were tough. We started out new flotation and fine-grind plant, and we had to suspend operations after it became apparent that we were unable to stabilize metallurgical performance. We made use of that period to do a number of engineering upgrades, and at the same time the plant in its pre-FFG configuration stabilized quite rapidly. Metallurgical efficiencies going to back to stable to normal quite quickly and the numbers were encouraging. So, we did produce more gold for the six months than the previous six months it wasn't a massive hurdle to clear but it was a plant performing to specification and to expectation. All-in sustaining cost this number is being distorted somewhat by I think the way that all-in sustaining cost is now being defined there is still an element of non-cash costs that's brought to the all-in sustaining cost, it's probably better to talk about all in cash cost. But that too is a term that's been tossed around and doesn't really have a fixed definition but what it's worth, and for those who track it the all in sustaining cost also in dollar terms. More important numbers and switch it and drag actual performance operating profit that went up nicely at a time when the gold price was in a bit of a slump and then also EBITDA was up by 59% to just over R110 million to R115 million. For the quarter, quarter-on-quarter, the number is slightly less than what they were during the winter months. During this time we started up test work at our flotation and fine-grind plant. We ran one-third of the float plant basically one-third of total throughput was channeled through the section, that didn't impact on gold production, that didn't impact on the trend, there was a period during which the plant basically normalized and some of the leads in last quarter and I'll spend little bit of time talking about that. Jaco Schoeman, our Operating Head is also here, and he also talk into some detail to the extent if you have questions. We did towards the end have a fairly significant rainstorm that had an impact on throughput because of a pond that formed on one of the reclamation sites and reclamation site was out of action for about a week and then we also had 67 hours of lost production because of load shedding and the interesting thing or the thing that could impact us if load shedding is still applied is the fact that we are over three load shedding zones. So, instead of just having two hours at the plant for example we would have two hours at the plant, two hours in central Johannesburg and two hours towards the west of Johannesburg. We've now got a different arrangement with Eskom, and I'll talk a little bit about that but that also impacted somewhat on the gold production for the quarter or for the quarter-on-quarter number. Cash balance over this period, which is an important parameter for us because the markets aren't exactly throwing capital at mining companies at this stage, they are managing cash position very-very carefully and during this time when we pretty much in a recovery phase and the phase of trying to stabilize the business and also have to pay down R77 million worth of debt we managed through get the cash balance up by 19% to just over 240 million it's nicer to say R0.25 billion in cash that's the number. And so far as the operating trends are concerned and I think this really tells the story of the past 12 months and there are two graphs year in particular but I think significant and I'd like to spend a bit of time on. It's this one here, which shows the yield 10 grams per tonne and this one here that shows production in kilos per quarter. And you could see the significant impact there of the initial difficulties that we experienced with the starting up of the floatation in fine-grind that was pretty much an all time low and the recovery efficiency of the last few years and then reestablishing itself nicely at above 0.17 and then trending up and continuing up towards the point two also we had stabilize the plan, stabilize metallurgical efficiency and despite the fact that we have to start up phase with the floatation and fine-grind. And then similar there would be gold production all time low, trending up nicely, picking nicely for the year and then slightly off towards the end of the year and that large extent associated it’s not a large extent almost in its entirety as a consequence of the much volume throughput following the rainstorm and also the bit of Eskom had to manage our way through but yes I think that is probably very significant comparison to make. Despite higher tonnes, extraction efficiency was lower, production significantly lower. Despite lower tonnes, section efficiency higher and gold production second only to the previous quarter when the plant had stabilized. And that for us is an important indicator of where we want to take this business that number there correlation between these two. So once we get back up and running again and I'll spend a little time just on how we manage volume throughput. I think you'll see why these two parameters in the tonnage and the extraction efficiency those two are the ones most closely watched from an operational perspective. On the financial indicators I want to ask my colleague Riaan Davel who's our new CFO, this is your first presentation I would ask him to take you through the financial indicators and then I'll wrap it up.

Thank you very much Niël, good morning ladies and gentlemen. It's my privilege to take you through the financial trends this morning and also focusing on the statement of profit and loss and statement of financial position very much a quarterly focus that I will take you through. As you all know more detail recorded in the report to shareholders that you have access to here and also on our Web site. So looking at the operating margin trend very positive operating margin increase over the last four quarters and almost getting us through that very good second quarter for 2014 financial year, so a really positive trend for operating margins. All-in sustaining cost margin that Niël referred to at some point it's difficult nature to understand and especially on that graph that it was very specific whether for non-cash adjustments in the fourth quarter of the 2014 year that distorts that number, but I want to focus on the last two quarters. So a good increase in the all-in sustaining cost margin and taking to account that the average gold cost for the year decreased by 2% and I think cost containments are the order of the day which is a very positive trend we see in the operation. EBITDA of earnings before interest tax and depreciation very much a major of profit loss before tax with those adjustments the finance cost any impairments any tax just and then the big one that shows the big increase for DRDGOLD is depreciation which you'll see on the next slide which is quite a big number on a quarterly basis that's obviously adjusted in the EBITDA number. But the one that I want you to mark with an X and when you leave here and maybe spend time with colleagues definitely tonight with family friends, loved ones is the free cash flow growth. So just to remind you free cash flow very much operating cash flow less investing so it's operating less any sustaining capital expenditure or any capital expenditure spent and just under 140 million for the last two quarters. So as Niël mentioned obviously that the almost 70 million in the first quarter was predominantly used to settle the second last of the domestic medium term notes program notes for us. And then here's extremely positive cash flow and I agree with you in my opinion this probably the most objective and relevant measure for performance in any mining entity so we're very proud of the free cash flow performance. And yes this interesting obviously all that that was a very good quarter for significant capital spend that happened in the quarter that we produced the free cash flow margin. And then headline earnings percent per share again the fourth quarter that positive non-cash adjustment distorts that pretty much at zero cents per share for the last two quarters. Looking at the statement of profit and loss, specifically as I mentioned focusing quarter on quarter, you'd see that revenue declined by around 8% as a result of reduction in gold sold and as I mentioned the 2% decline in the average gram price per kilogram received and then on the cost side again as I mentioned very good cost containment so that net operating cost line declined by 10% which both gives us a 6% operating profit increase quarter-on-quarter that Niël also referred to on the second slide. Then the depreciation number as I mentioned that impacts the earnings before interest tax and depreciation quite a big number and a slight increase this quarter as a result of the additional use of the floatation find-grind circuit. I think from cost if I just want to focus on included in the and you'll see it in the detail in the results as well a sale of non-core land of about 11 million small impairment in respect of the Village Main Reef investment because as you know that's reflected on a quarterly basis actual value of that listed price. And then very positive trend that you won't be able to see on this slide but you'll pick up in the detail so you compare the corporate cost and administration cost for the six months to 31 December, 2014 in comparison to the six months December 2013 so it's a 24% reduction which is a good achievement and a positive one. And then ending off with net finance cost income tax which leaves the quarterly results at a profit after tax of 1.9 million and as I mentioned around EBITDA a very positive 44% increase in comparison to the previous quarter. Now the statement of financial position or balance sheet we achieved property plant and equipment we'll have this declining change now as I mentioned the capital expenditure as basically the big capital expenditure projects has come to a stop, so with the depreciation charge that balance will start declining overtime. The non-current investments in other assets the bulk of that as I've mentioned the Village Main Reef investment that's carry that fair value and Niël will comment at his looking ahead section just further on a subsequent event in that respect. And then I want to emphasize the cash balance, so 19% increase from the previous quarter which again is a very objective result and good and easy to measure. Then on the liability side the 29 million long term liabilities 21 of that relates to financed leased capitalization of backup generators that came into operation during October 2014 so the opposite exit side has been capitalizing Property Plant and equipments as the financed leased liability. And then the other number that I just want to emphasize is that current liabilities included in 302 million is the loss of the DMTN notes of approximately 77 million that's due at the beginning of July so that's included in that balance and all of that leaves DRDGOLD with a very healthy textbook current ratio of 1.5. So those are the financial results in nutshell and I'm going to hand over to Niël. Niël Pretorius: Thanks, Riaan. Just on the floatation and fine grind update what we've been doing since April of last year we decided specifically not to try and restart this section or the circuit before winter tariffs had ran its course because winter tariffs add somewhat mistaken between 12 million and 14 million to the overhead per month. The circuit in full flight adds another 14 million approximately to the total overhead. So if it's not giving the gold to offset those costs and obviously you run the risk of just adding all of these cost now knowing exactly what your gold production is going to look like. So we decided to just take a bit of timeout on when we start this thing up again, go through every circuit, every section to see where we still vulnerable, what are the things that we can improve and then only start test work in a staggered or staged fashion not from the whole thing simultaneously. So in September, we started with the first phase of test work or with test work by starting up one float bank or line of float sales that means that we basically channeled a third of total volume throughput through the circuit and we saw interesting trends right from the word go. We've never had any difficulty with the efficiency of the float circuit itself that was the one part of this new piece of technology that worked really well right from the word go. We manage to get the pyrites out, 90% recovery for pyrites, gold content was bang on target, et cetera et cetera for the mills itself the mills or clearly the right technology for this kind of concentrate because it is breaking down the sale price to the required traction and we're seeing more gold and ending up in solution. Problem that we experience the first time round was associated with carbon efficiencies and they layout of the CIP circuit and also what we did with carbon that was already in inventory in that we had torn down for illusion et cetera et cetera but the trending indicated right from the word go that the plant is performing to specification. The one very important indicator that we wanted to verify and that we wanted to be able to reconcile the actual gold production was the tail value, the residue value. With the first time ran the first test we saw a significant increase in dissolve losses which basically means that all the gold that ended up or a lot of the gold that ended up in solution setting solutions doesn't settle and from his way after plant setting solution in water and we wanted to achieve a reduction in the total residue value of 0.3 gram a tonne because that's how it is increased in gold production that we want to associate with this plant and once we feel that, we feel that we were ready to been also start the second and the third float back and we did that during January. So the test work we were happy with and it certainly set the stage for us to start running the rest of the float plant as well and we're doing this one from measured and proven base case. There is very little theory or calculation involved, this is based on observation that we could start this backup again. Something that we also did during this period was address areas of vulnerability and the one area specifically that we saw could impact on volume throughput was the reliability of the thickness in order for the float plant to function properly we've got to drop the density of the feed in order for the CIL circuit to work properly we've got to increase the density of the feed and that we do with sets thickeners and the most important one in this whole process is the thickeners at the tail of the float circuit before it goes into the CIL. And these things are very temperamental, if there is a little bit of drop in power or if there is an interruption in power supply they start torqueing very-very quickly and torqueing as in torqueing and in order to get this to start working again you've actually got to drain the entire thickener, wash it out and that takes a week to fix. So what we did during this period was do install additional power back up, install underflow terms and that helps us to keep this thickener this large extensive of slurry to keep it in motion and keep it in suspension. It was fortuitous that we did because if we hadn’t done that and it wasn’t planned we weren’t planning towards load shading but it was one of those fortunate unintended consequences. Now with power that sometimes switched off without notification, we're able to keep the thickeners alive, but for this we would probably been in a situation where it would have stood until after we had installed all of this backup capacity. So that's one engineering upgrade that we did that is significantly derisk this organization and so far as unreliable and predictable power supply is concerned. And there were number of other ones as well but I think that is the most important one. Ours is an ongoing quest to see if we can create a bit of daylight between the amount of gold that we can produce and the amount of gold that we have to produce and volume optionality I think has become a very important strategic thing and how we allocate resource and how we dedicate capital. And if we can increase the number of sites from which we can source material not relying so much on two or three main sources and that volume optionality becomes a reality for us. In addition to that this plant isn’t running at full capacity there were a number of CIL tanks but that we did not refurbish first time round. There's six of them one is being refurbished as we speak, another five is also in an advance stage of refurbishment there's a target date for that, but this little project Van Dyk project we call it the Van Dyk project because that is the resource that we'll be accessing in mining in order to fund this capital upgrade. This will provide the additional optionality and as far sourcing of material is concerned, but it also gives us additional volume capacity in the plant itself. So Ergo which at the moment has 1.8 million tonne a month volume capacity will now once this is up and running have 2.1 million volume capacity. It's unlikely that we will treat or that we will make full use of the entire volume capacity but it does mean that the amount of slurry that we can put through the plant and the amount of slurry that we have to put through the plant in order for us to cover the overhead and yield the return that we're looking at there's a little bit of optionality or daylight appears in that crop, so it's not quite as marginal. The two greater sensitivities as I said earlier in this model is the fact that it requires lots and lots of tonnes and it is very sensitive to extraction efficiencies and this certainly addresses one of those key issues where it helps us in reducing the risk exposure associated with our ability to get the volumes through especially at the time where maybe in the Far West Rand there's a power interruption and despite the arrangement that we have with Eskom we can't start those pumps or we can't run those pumps. And closer to home, we've got the Van Dyk facility which we can run. So ZAR23 million CapEx project which is being funded on cash flows and this one will breakeven at 384,000 that is the advantage also of looking at growth and expansion and derisking and optionality and so forth and so forth within your immediate footprint, because we can leverage the establish the existing infrastructure that we've got. Van Dyk standing by itself there and the vast expense of the East Rand could never fund the construction of the plant and a tailings dam and reclamations and reclamation infrastructure and so forth. But all of that stuff is already there so it's really just its plugging it in and doing what we've done with 24 other reclamation sites and this assist us in funding whether strategically and important developments in the organization. And then just a little about load shading and I'm sure there'll be some more questions about that. So in December we were switched off for a number of hours, we lost a total of 67 that were the hours that were the power wasn’t on that the power is switched off. In addition to that obviously the recovery period afterwards which we had managed to significantly shrink because we've got all of this back up capacity. We now have a consumption curtailment agreement with Eskom basically what that means is that if they do plan or if they require to implement load shading Phase 1 or 2 or stage 1, 2, 3 then we get two hour ahead notice prior notice and then we drop our total consumption by up to 10% for stage 1 and 2 of our base load and up to 20% in the event that there stage 3. Now we've never had stage 3 we've had a number of stage 1 and 2s there have been instances where we had stage 1 and 2 where we didn’t get the notification where we weren’t asked to switch off but the undertaking is there and it seems to be working well. There have been times obviously this whole thing is managed not it's not an automated process it's somebody sitting at a terminal switching lines on and off and there have been instances on the Sunday morning they would just simply switch off the power then we would find them and say our power is off you're in breach of our arrangement and then they would switch the power back on unfortunately because we've got this back up capacity we could then resume production and resume operations in a very short period of time. So any 30 odd minutes and then we're up and running again. So that's working for us at this stage and the advantage of having this arrangement is the fact that whilst and how we configure the plant we do sacrifice a degree of extraction efficiency and I'll tell you exactly how this configuration works. The volume throughput can be maintained with the exception of when this load 3 or stage 3 load shedding then we in fact reduce volume throughput by about 840 tonnes per hour just under a 1,000 tonnes per hour. Capacity here if we have a good day for the Ergo plant is about 60,000 to 62,000 tonnes that's more or less the impact that we'd have on volume throughput if there is stage 3 load shedding. The way that we manage this, the way that we do save this power and let me maybe say upfront we don't have to reduce load, we don't have to switch any of our circuits off we've adequate backup electricity to basically run at full capacity we've got the better part of MVA if I'm not mistaken at various critical parts of our production line or our production circuit at the tailings facility where we've got an enormous generator I think that's the one way we've got the 21 million amortization. That one can pretty much take care of the whole lot and that's a critical one because if you can't remove your tailings and basically you can't put anything into the plant so that we've got regardless and we've had that for some time and then in the plant as well, so we can't run at full capacity but at this stage it indicates that the indicators or that the amount of gold that we will produce by switching on the backup generators don't quite or doesn't quite cover the costs of the diesel generator. When there is a stage 3 load shedding scenario and it's a 20% drop then it starts making sense then you can get sort of the current diesel price and also what we pay on the maintenance lease for some of the generators and you can more or less breakeven. But at this stage if there is a load shedding scenario we just reduced our total consumptions and put a specific protocol against which we do that. And something what we do is most of what we need to save if we can't save by running only two thirds of the floatation circuit and circumventing the third one, the third line of float cells. So then it means that basically those float cells aren't running there is reduced consumption in your mills and takes care of most of it and that's what I meant earlier when I said that we sacrifice the degree of extraction efficiency that associated with the one third of the total throughput for that period of time while it's not sacrificing throughput. I think the impact we've calculated if we've got load shedding everyday for an entire month the impact of that is run about 15 kilos of gold production per months but then you've got to have load shedding every day and we're not quite there, we haven't seen any of that. So, at the moment whilst I think there is uncertainty regarding the future for Eskom, what is electricity supply going to look like, I know that some of my colleagues in the mining industry have also expressed their concerns about what is the winter months going to look like, is there going to be a requirement for us to share even more consumption at the time the situation that they can maintain, current scenario seems to be entirely manageable for a company like us. So, it's a big advantage for us is that we don't have to we don't sacrifice an entire shift and if you've got an entire crew for a day shift in an underground environment that you've got to send underground and you don't know whether or not the power's going to be around. I think that's a much more serious scenario than the switching on and off of some slurry pumps. On the looking ahead side, that is Main Reef didn't approach us regarding the offer from Heaven-Sent Capital for R12.25 a share we support that, it's still a little bit shy of what we had hope to get for our Village Main Reef shares but I suppose if you look at the what we sell the business for, what we got in the working capital adjustment, the dividend that was paid which was a good dividend and as all adds up then we probably slightly north of what the initial sales price was. So we are in support of that, there are a million encumbered shares that are held in escrow. You will recall that part of the initial sales agreement with Village Main Reef, 20 million shares that now being consolidated into 1 million shares are held in escrow until after all the conditions of the sale agreement were met and those conditions involve the consent of the Minister and Section 11 consents and so forth and so forth. There is currently an arbitration pending involving that dispute where we're alleging that Village didn't do everything they should and they're alleging that they did. The route that those shares will follow or the proceeds of those shares will follow will be determined by the arbitration unless we come to an arrangement and there is the Village Main Reef executives and our executives come to an arrangement which is not entirely unfeasible, it's a very limited dispute that's remaining and the upside downside really is to the large extent limited to or restricted to what happens with the shares and the proceeds of the shares I think there's 6 million in extra dividends also that's holding extra where does that end up. So unencumbered investment that's what we'll get for the shares that we already own that's just other ZAR14 million and then the rest is 12.5 plus 6 there's about another ZAR18 million. So we're hoping that they can get this through quite quickly because this is not a bad number for us considering that it was very much passive investment and one that we hold with a view of seeing Blyvoor taken into the future, seeing [Talberfos] all of those gold assets taken into the future. We thought that that was a good story and you recall that this transaction was done when the gold price was still about $1,800. And this was going to be significantly geared gold share. So at the moment, we've got just over ZAR228 million in unrestricted cash balance which means that this cash that is not committed by some sort of guarantee we decided though not to pay an interim dividend we did pay one last year that was our first interim dividend before that we had six annual dividends so we paid seven annual dividends we've decided rather since we are at the at a critical phase in the configuration of our operations with float and fine-grind and also in view of the fact that we've got the ZAR77 million still owing on the DMTN program that we'd rather try to retire that debt prematurely get it off the balance sheet and then we know exactly by the end of this financial year how much we have in the bank and how much we can offer to shareholders by the way of the dividends or maybe a buyback if the share remains undervalued. So that will stay in the bank and be used only for purposes of the payments of the note program, but obviously keeping a keen eye on the Village transaction it will be a nice addition to the cash balance and in the near-term our focus will be to optimize the filtration and fine-grind circuit. Now what we're seeing and I will elaborate just a little bit on that and then Jaco's also here for that purpose to give you some more detailed answers to questions if you may have. As we started up the remaining two float circuits we've since gone back to running only the second one with the third one amidst this period of switching on and switching off associated with load shading and the fact that we are now doubling the volume into the circuit we back to two and what we are seeing is pretty much in line with what we expected to see and that is that there is an almost immediate increase in the pulp core which basically means more material more gold is coming into solution and we're also seeing the carbon efficiency of the pulp core lag to the same extent that when we started up the first circuit. A discussion that we've had over the last few days and weeks of a closely monitoring the performance of this now the second line is that whether we shouldn’t include in our thinking the fact that through the doubling of volume you're introducing a multiple that requires a proportionate increase in some of the other dynamics associated with this namely raise it in its time and maybe well we won't be moving around with the chemical balance, but maybe there's some maybe we need to take into consideration the fact that we are doubling the volume through this and it's essentially a plant where the same capacity and throughput. So we're now keeping a close watch on that it's pretty much stabilized and we're seeing increments in the carbon efficiencies, but the carbon efficiencies have not yet achieved the level which we saw in the initial test phase and we think that this to a large extent associated with a similar lag that we saw with the first phase but we also opened our minds to the possibility that there might be a slightly longer lag because we have in fact doubled the volume going through the same circuit. So I think we're comfortable with where we are realizing that there is a room for improvement but that there are absolutely no indicators as to that we're in the reverse trend where that we're seeing a reduction and extraction efficiency and we will give updates to the market as we go along in this regard. So I think pretty much summarizes our activities for the last six months and also what we want to do going into the next few months. And myself, Riaan and Jaco will now take any questions that you might have. [Foreign Language] I will just stand here and then the two of you can sit there. Q - Adiran Hammond: It's Adrian Hammond Standard Bank. Yes, I've got three questions. Firstly on the yield, if you achieve what you expect with the next two streams coming on, in terms of carbon efficiencies, extraction overall, what sort of yield could we expect to see? And secondly, could you comment around head grades, what are you seeing in the head grade now and give us an outlook if you could? And thirdly I am not -- could you just explain a bit more about your ability to handle heavy rains my understanding was that the thickener that was bought online would deal with that? Thanks. Niël Pretorius: Let me start at the back and then I will give just the overview on yields and head grades. As far as the heavy rainstorm was concerned this was a particular instance one of the reclamation sites have filled up and it choked the valve that's suppose to deal with excess water. So this wasn’t something that actually went into the plan, this was restrictive access into a specific reclamation site and as a consequence of which we couldn't mine that particular site. We had a done postmortem investigation as to why this had happened and apparently what had happened is the rainstorm itself was a fairly heavy down pour, Henry my recollection was about 80 millimeters in an hour or something if I am not mistaken. So heavy down pour and we saw a bit of debris that was on site choked up the valves itself, the screens going into the valve into the port and we couldn't access that bit that for a period of time and we weren't going to send somebody in there because once you unblock obviously you have significant suction and then that could pose a grave danger to whoever might be busy unblocking it. So it's something that just simple housekeeping, there is no need for change in systems or a change in configuration it's something that housekeeping could prevent and also that the mining configuration could prevent but in a way that we basically have these ponds and paddocks and layouts on top of the tailings dam. And I think your attending the Investor Media Day next week. I think we will be able to show more of this in on site how this had come together. On the issue of grade I think we want to manage the whole issue of head grade and the issue of recovered grade with a long-term view in mind. Last initially you would see a small spiked than the actual recovered grades and I think what we are targeting in the long-term is about 0.2 gram of tonne leaving out the three of our decimals after that. But ultimately what we want to do is stabilize our recoveries at around 0.2 gram a tonne and manage the mix in such a way that we can extend the life of mine because increasingly refining these little pockets of high grade as they can bring from external sources but those little pockets of high grades it's like the smallish Van Dyk you can't mine those in isolation you do need the volume throughput. So if you can moderate the length at which you exploit the remainder of your resource and it means that you can take your life of mine from 8 years to 12 years to 14 years to 18 years. So there is no way that I think we will simply just take full advantage of the scenario as it currently is. We will carefully look at how should we manage extraction rates and how should we manage the rate at which we access the more accessible lower risk sites. The largest sites where we have got a very large concentration of material how can we match and mix those in order to extend the life of one pit because ultimately what we want to do is mine as much of this 11 million ounce resources we possibly can. We don't only want to mine the 2 million that we have got on the reserve statement at this stage we want to mine as much of the 11 million as we possibly can. And the longer you mine the better chance you give yourself to take advantage of an increase in the gold price as and whenever it occurs and these cycles are getting shorter and shorter and they are becoming sharper and sharper you have got these really high spikes in these really low troughs and they seem to be packed so closely together. But you don’t want to find yourself in a situation where for three, four years you have mined this thing as hard as you possibly can and then five years from now the gold price goes to $2,500 an ounce and the rand is sitting at ZAR10 an ounce, and you have now accelerated mining unnecessarily. So we're very much looking at it and I didn't talk much about the golden thread that drives our strategic thinking of sustainable development and long-term sustainability. But we are very much looking at this mine, it's configuration our footprint, the potential for growth expansion et cetera, et cetera. We're looking at that from the perspective of we want to be around as long as possible and we want to mine as much of this 11 million ounce resources we possibly can. So yes I think what we would probably want to do next week when we do the Analyst visit is give you some sort of an indication as to how this mix is coming by and how do we get to the head grades and the tail grades and so forth and so forth. But I think what you ultimately will realize is that what we're doing is we're managing and maintaining the mother ship our center of gravity the Ergo plant in such a way that we have something that pays for itself as long as it possibly can and then accessing these little green shoots that are optic and just topping up the bottom-line with this. And I think that's going to be our model for some time to come that is certainly the way that we are approaching the allocation of strategic resources and capital at this space. Anybody else, any other questions?

So just to jump back to the numbers there trough yield was about 0.16 you have climbed nicely in a straight year to just shy of 0.2 and you were mentioning that your recovery has got -- your residue grade is now being came down to about 0.03, I was just wondering what was it back then when the yield was 0.16? And then therefore what is feed grade gradient and how has your feed grade changed? Niël Pretorius: Look the head grade doesn't change by much but the recovery efficiency are certainly going up quite a bit, I think we were sitting at about 38% and we're now starting to bump against 50% and 51% of actual recovery efficiency I think that something you can – I'm sure that you're going to write. We've identified the two main culprits as being one, the fact that a lot of gold ended up in solution, ended up in the water and a lot of work there was being pumped out of the plant at that stage. And our early sampling didn't quite pick up just how much gold was have been dissolved, what the soluble gold content was and what the dissolved losses were? So, that we identified during this period also the suspension of the plant during this period of analysis. We've identified that is one of the main culprits, the dissolve losses and the excess water that was being pumped out and go through the process. Every time the thickener trips you've got to drain that thickener doesn't go through much of it doesn't go through the process every time there is a rainstorm and remember last year between February and March we've three weeks of uninterrupted rain, a lot of water came in and we didn't get to that. We didn't get it through the plant, it had to be pumped up and there was gold anything that water because if it gone through the initial floats phase, second main culprit was the regeneration of carbon, natural carbon efficiencies. We established that our carbon efficiencies were not where they was suppose to be because at some stage and to a reasons that we have subsequently identified and we've manage to intercept now, the volatiles on the carbon which is really organic matter and this is carbon that it had already been in inventory been through the process wasn't removed to the same levels that we've done in the past. There is case of a little of dirty carbon going back into solution. What you also need to appreciate and accept is that if there is just a slightest indication of carbon inefficiency, we now have a concentrate, especially in the high grade you have got a concentrate by its very nature of sulfides and sulfide is really the one substance or agent that gold associates with. So if your carbon doesn't hurry up, they your sulfide is going to get busy again and they you're going to find your gold going out the wrong end of the plant here. So, you've got to have a very finely tuned and very finely balanced proceeds during which after it's been liberated, after it's been leached it's got to settle onto the carbon and if you carbon efficiencies are just slightly off then you start seeing a loss in gold and those were the two key drivers at the time. We saw carbon efficiencies down to how much Jaco? You'll have to refresh my memory?

Sorry, carbon efficiency? Niël Pretorius: Carbon efficiency.

The carbon efficiency is dropped to about 60% and you need that about 80 and then it comes [indiscernible]. Niël Pretorius: So, it is and I suppose that is something that afterwards was a concern for us is a fact that and maybe it's also because it was the commissioning of a new plant. It wasn't to do anything with the operation of the float plant so nothing to do with the operation of the actual mills it was to do with a mentality and key component being carbon inefficiencies. So, it was manageable. A concern that we had was whether the float reagents, we're having an impact on the carbon efficiencies. Were we having clouding of carbon et cetera et cetera and that turned out and that was a question that we solved that remained unanswered at the time when we started doing test work as it turned out to be the impact of those reagents is negligible.

Just one other thing, could you just give us an idea of what's happened with cyanide prices? Niël Pretorius: Jaco, what happened with cyanide prices, I know our cost have come down, I mean some of that chemical is actually down a little bit and I think steel is also come down a little bit. It's been a change in the pricing regime in some of the monopoly suppliers where they're restricted from import parity pricing they've got to do it on an export parity basis. An advantage that we have here supposed at this stage is the fact that energy associated with oil which is your delivery cost and so forth. Oil is cheap so diesel is cheap so you don't see that price volatility or that passing on of price increase in deliveries with chemicals and steel is similar scenario steel prices are pretty much tanked so those are down or at least they've stayed flat, chemicals also on the pricing regime. And then we manage to extend our labor wage agreement by a year, so that's been locked in we can pretty much plot that. The only uncertainty at this stage is what's going to happen with Eskom pricing but there too our exposure is so much lower than many of the other companies I think we're at about 16% of total cost, it's electricity cost.

If I could just -- you mentioned tail grade of 0.3? Niël Pretorius: Yes sorry, that's a drop in the tail grade that we seeking, not the tail grade. Yes, sorry, Jaco, you're absolutely right. And let's say, it's not the tail grade itself that's just improved efficiencies with floatation fine-grind specifically designed to reduce the tail rate by 0.03, so 2 million tonnes 16 kilos of extra gold.

Hi Niël Adrian Williams from Avior Capital. Just a quick question can you give us a bit of guidance on where you see production for your full year and still 4,500 kilograms does that sound about right if you keep your yields flat at about 190? Niël Pretorius: We're targeting roughly 145,000 ounces at this stage I think it's the range within which we're targeting we on 76,000 so we need another 70 to get to that so I think the lower end of our estimate at this stage is about 145,000ounces, 146,000 ounces.

Alan Cook from JPMorgan, could you just explain there seems to be a mismatch between the capacity at the high-graded circuit now, post that expansion if you go to 2.1 million tonnes what happens to the float and fine-grind because that can only be 1.8? Niël Pretorius: We won't be able to put the entire fleet through the flow pot we're restricted to 1.8 million.

So that's just material from Van Dyk for example go straight to the low grade CIL? Niël Pretorius: Well it doesn’t necessarily have to be Van Dyk material it could be from any of the three lines yes but some of it would go straight into CIL.

So you will still be doing assuming you run all three float banks 1.8 through that circuit upgrade? Niël Pretorius: Yes that is correct and the feasibility study it was also done on the basis that it doesn’t go through the float circuit so there are 384,000 kilo that's assuming recoveries that don’t benefit from the float circuit.

Which is what 50%? Niël Pretorius: No-no that's low that's about 42%.

42. Niël Pretorius: Between 40% and 42% recovery.

And if you decide at a later stage to increase the capacity at the high-grade circuit what would that cost? Niël Pretorius: We won't do that it's really -- I suppose we could increase the float circuit because we're only using about half that building at this stage.

We do have to think now that can be refurbished but at this point in time whatever number I'm going to give you it probably would be out there and so by the time you view that so we'd like to do the full feasibility on that study to understand exactly the capital cost for that, but there is a fourth bank that we can refurbish to take roughly 2.4 those are designed to do even in total 2.4. Niël Pretorius: Our consideration is that it's not just the capacity of the plant but it's also the capacity of your tailings dam. We got to manage the rates of rise very carefully because there's a lot of material going up onto that debt. And something like that would probably form part of an expansion of the tailings facility footprint as well. There's a whole cycle almost the same size or maybe not quite but substantial portion right next to the Withok tailings dam, that used to be a tailings dam but Anglo has – they have reworked and it's a licensed tailings site but that would have to be refurbished as well or that would have to be re-commissioned rather in order to take up this additional flow on an ongoing basis so you could have your little spice of 2.1 and so forth from time to time but you don’t want to run it at full capacity and saturate your tailings dam prematurely.

And then just the last one I think got it right when you start this focus it adds about ZAR40 million a month is that all three banks? Niël Pretorius: That's all three banks.

So that's to add o operating cost? Niël Pretorius: Correct, yes. And so the first question is on the ERPM sale, do you have concerns re the performance of suspensive conditions? One, well it's the only suspensive condition outstanding or the regulatory conditions and we don’t see anything out of the ordinary there beyond the receipt of the required funds we've been given assurances by the buyer that they do have the required funds and this was done all through an extensive due diligence by the funders I think there were uncertainty at times they've also put a fairly substantial deposit on risk into the transaction so that is as far as the assurances that we've got. We don’t work any of that into our cash flow forecast or expectations at this stage so we'll see the money when you see it but there's been some assurance given of availability of fund. When would you anticipate the payment of these funds? That will happen on the ERPM sale that will happen once we the loss of the suspensive conditions are being fulfilled in other words once the DMR says that the deal is a go. Do you have plans how to use these funds? Yes we'll pay off debt if there's still any debt outstanding and then we'll look at what our cash balance is we want to maintain a month's worth of working capital and then depending on what the share price is we'll either pay dividend or we'll ask the Board if we can buy back some shares.

Alexandra Wexler, Wall Street Journal you mentioned that Eskom was one of the biggest tariff challenges that you are facing and that running the diesel generator isn't really economically viable, so are you looking into any sort of alternative energy power sources or what sort of a long-term plan now? Niël Pretorius: Most of the in-house power generating plans that we have are conceptual at this stage. I suppose the most realistic of all would be the gas turbine. There is a gas line from Sasol that runs past our door step and once an adequate supply of gas from Mozambique is secured and sourced we can approach them and say can you give us X was it gigajoules, is that the term that you use, of gas supply, and we could put up a turbine. It's not that difficult to boil water, it's a case of getting to through the regulatory issues and so forth and if the supply is there the supply is there ask anybody who lives on the gas line in the northern suburbs. Does that answer your question?

Yes. Niël Pretorius: I think Insofar as the Eskom situation is concerned it's more of the uncertainty, it's more of perceived risk but good days and bad days we have had a few good days tomorrow could be different. All right I think we're all done. Thank you very much everybody.