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Gold/Mining/Energy : DROOY Durban Deep- Best S. African Mine -- Ignore unavailable to you. Want to Upgrade?

To: POLARBEAR who wrote (285)	10/10/1999 2:43:00 PM
From: C Hudson	Respond to of 851

From the company: DRD hedging policy delivers best of both worlds: CE Johannesburg - Gold mining group Durban Roodepoort Deep's hedging policy will protect the remainder of its capital and restructuring programmes without unduly curbing the company's capacity to participate in an increase in the spot price of gold, chief executive Mike Prinsloo said on Friday. Prinsloo noted that DRD had sold forward some 1.5m ounces over the next five years, which represented less than 25% of planned production over that period and less than 10% of ore reserves. These ounces had been sold forward specifically to cover the rest of DRD's capital and restructuring programmes, at levels sufficient to deliver a cash operating margin. "This obviously leaves by far the greater part of DRD's production unhedged and open to participation in the spot price. "What is more, if the price stays at current levels, DRD will increase its production and the percentage of hedged production will decrease correspondingly," Prinsloo said. "As far as our hedging policy is concerned, DRD primarily uses plain 'vanilla' instruments and has always limited the use of exotic structures and lease rate swaps. "With the recent increase in the gold price and the change in market sentiment, DRD has purchased call options which will give its shareholders even greater participation if the price continuesto rise." DRD's published ore reserves of 13.7m ounces were calculated at a gold price of R55 000/kg. At a price of R61 700 ( spot price of $320/oz and exchange rate of R6.00/$ ) , these payable ore reserves increased by 700 000 ounces or 5% of 14.4m ounces. This increase is equivalent to approximately half of DRD's hedged ounces. This ore reserve calculation excludes the 2 million additional ounces obtained through the recent acquisition of Hartebeestfontein. With the Hartebeestfontein acquisition, the DRD Group now produces 1.2m ounces of gold per year. This excludes any production from the Australasian region.