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Argonaut Project
Presented at New Orleans ConferenceNovember 2002
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Disclaimer
Certain forward looking statements are contained in this
presentation which include, without limitation, expectations
regarding the gold price, production estimates, operating
expenditure, capital expenditure projections and the
financial position of the company.
Although DRD believes that the expectations reflected in such
statements are reasonable, no assurance can be given that
such expectations will prove to be accurate.
Accordingly, results could differ from those projected.
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What is Argonaut?
Largest single untapped gold resource in the world
DRD’s Southern Down Dip Extension of the
Central Rand
Surface area = 270km2 (30km long x 10km wide)
Main Reef and Main Reef Leader
Depth: 3 000m - 5 000m below surface
Resource 111m oz = 3 500 tonnes
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What is Argonaut?
Mining could continue for the next 100 years
DRD “Bluesky” potential for 3 new mines
Central, East and West Mine
12 000 jobs per mine
Mining to 5 000 m not an obstacle
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History of Argonaut
1983 - 1986 First project team from Rand Mines
1983 - 1989 First 9 boreholes drilled
1989 - 1990 Further investigations by DRD
1993 Re-evaluation of geological
information by Reading and
Reynolds
R70 million spent on project to date
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How does Argonaut rank internationally?
Operations Resources m oz %1. Harmony 12 295 19%2. Anglogold 20 282 18%3. Newmont 26 170 11%4. Gold Fields 8 151 9%5. Placer/Aurion 22 144 9%6. Barrick 18 129 8%7. Argonaut - 111 7%8. Western Areas - 109 7%9. Avgold - 80 5%10. Durban Deep 4 65 4%11. ARM Gold 3 23 1%
TOTAL 1 559 100%
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Gold production
million oz per annum %1. Newmont 8.6 24%2. Barrick 5.6 16%3. Anglogold 5.5 15%4. Gold Fields 4.5 12%5. Placer/Aurion 3.8 11%6. Harmony 3.2 9%7. Argonaut 1.4 4%8. ARM Gold 1.1 3%9. Durban Deep 1.0 3%10. Western Areas 0.7 2%11. Avgold 0.5 1%
TOTAL 35.8 100%
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Cash costs
$/oz1. Durban Deep 2472. Harmony 2043. Western Areas 1854. Newmont 1805. Gold Fields 1776. Placer/Aurion 1757. Barrick 1678. ARM Gold 1679. Anglogold 16010. Argonaut 16011. Avgold 130
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Market cap per resource ounce
$/oz1. Barrick 602. Newmont 463. Gold Fields 354. Placer/Aurion 355. ARM Gold 296. Anglogold 207. Durban Deep 138. Harmony 99. Western Areas 710. Avgold 711. Argonaut 7
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Argonaut Mine
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Argonaut Mine
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Ore resources and shaft plan
Main Reef Main Reef Leader
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Shaft development
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Proposed borehole 2km grid positions
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Stratigraphy of the Main Conglomerateunit - Central Rand
BooysensShale
KimberlyConglomerate
KrugersdorpFormationBird Congl
LuipardsvleiQuartzite
Livingstone
RandfonteinQuartzite
Johnstone Con
LanglaagteQuartzite
Main Congl
MaraisburgQuartize
South Reef
Middle Reef
Main Reef LeaderBlack BarMain Reef
North Reef
Thickness range
30 - 50 metres
0 - 150 metres
150 - 200 metres
40 - 50 metres
200 - 275 metres
10 - 15 metres
80 - 100 metres
20 - 30 metres
90 - 100 metres
25 - 70 metres
75 - 100 metres
Dis
tanc
e 4m
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Mineral resource
Tons Grade Gold Gold
million g/ton tonnes m oz
Central 261 7.36 1 917 62
West 150 6.67 997 32
East 77 6.89 532 17
Total 487 7.10 3 446 111
Mined 144 11.4 1 648 53
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Comparisons with similar mines
The Argonaut Central Mine will produce 480 000tonnes/month of ore from 3 shaft systems
Shaft Ore milled Costs tonnes/month Rand/tonne
Kopanang (VAR no 9) 177 000 380 Tau Lekoa (VAR no 10) 160 000 303 Elandsrand 180 000 410 Harmony 166 000 321 Freegold 174 000 357 Average 171 000 356 Argonaut 160 000 385
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Prospecting costs
Summary: Costs (Jun 2002 money)
Cost Drilling 35 holes Prospecting permit - Surface boreholes R226 m 3D Seismic Survey R188 m Bankable feasibility R 50 m TOTAL R505 m
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Financial returns and sensitivity
ParametersBase case: Capex = R7 595 m
Gold price = R110 000/kg ($325/oz;R10.5/$) Cash costs = R385/ton ($160/oz) Grade = 7.5 g/t (conservative) NPV discount rate = 10%
Payback:min = 12 yearsmax = 14 years from June 2003
Life = min 20 years to 2034 with current information. Lifecould easily extend to 30 years once bankable feasibility iscompleted.
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Returns and sensitivity
Gold price Costs NPV IRRGold price +/- 10%
Low case $295/oz R385/t R 514 m 11.10% paBase case $325/oz R385/t R1 220 m 12.46% paHigh case $358/oz R385/t R2 304 m 14.36% pa
Costs: Pier group low/high
Low case $325/oz R320/t R2 046 m 13.93% paBase case $325/oz R385/t R1 220 m 12.46% paHigh case $325/oz R410/t R 904 m 11.85% pa
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Innovative mining concepts
Underground ore treatmentUnderground personnel accommodationNon-destructive blastingContinuous 24 hour/day operationsBackfilling of mined out areasHydroelectric electricity generationHydropower for drillingIce cooling for ventilationIssues for mining to 5 000m addressed inDeepmine research project
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Deepmine research project
Research project 1998 - 2001Funded by DRD, Anglogold, Gold Fields, CSIR,Wits University145 Research projects200 ResearchersFocus on mining to 5 000mDeepmine conclusion:
No serious impediments to mining to 5 000 m
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Conclusion
DRD is able to bring
a world class orebody
into full production by 2014