hold on whats going on here?, page-4

re: dr death told you so! Here is an update on DRDs financial position from Julian Phillips.

What a contrasting week for South Africa this week was. On the one hand, primarily due to falling differentials between South African interest rates and rising U.S. interest rates, the Rand buckled somewhat to fall 4% down to R6.24 to the U.S. $1. This impacted well on both the Johannesburg Stock Exchange and the S.A. Rand gold price. As the U.S. gold equities fell up to 10%, S.A. gold equities held steady, with the Index holding well above support [at 1600] at over 1700.





But both Harmony and DRD Gold hit very troubled waters. The amputations began at DRD Gold who have closed the doors on their troubled North West Operations around Stilfontein [The company is called Buffelsfontein]. After an earthquake threatened to add to their losing R231,000 a day, by a significant amount, [The No 5 shaft of the North West Operations accounts for approximately 11% of North West Operations total gold production suffered serious damage as a result of the earthquake] they faced a belligerent and rapacious Union, who would not only accept these difficulties but amid insults, demanded a wage increase at least 4% over inflation at 10%.





As a publication we are apolitical, taking no sides, but hold to non-prejudicial reporting. We want you to have price accurate reporting, always, but it has to be said, in South Africa, under the guise of putting right the iniquities of the previous “Apartheid regime”, scant regard is given to good business sense, whilst destructively aggressive attitudes dominate! It would seem therefore, that the Unions will press for this increase, despite the foreknowledge that it will cost over 5,000 jobs at Harmony alone.





The placing of the North West Operations of DRD Gold in Provisional liquidation, will place this operation in the hands of, at best, a judicial manager, who will carry the operation at the expense of the companies assets. DRD Gold in turn will stem the haemorrhaging of cash flow through this part of the company, leaving the remaining local South African Operations in better condition, alongside the profitable foreign operations. The completion of the payments from JCI to DRD Gold of 37 million lifts the company out of danger of further liquidations, it seems.