ITEM 4.    INFORMATION ON THE COMPANY

A.    HISTORY AND DEVELOPMENT OF THE COMPANY

Introduction

        Durban Roodepoort Deep, Limited is a gold mining company engaged in underground and surface gold mining including exploration, extraction, processing and smelting. Our operations consist of the North West Operations, the Blyvoor Section and our 40% interest in Crown Section, all in South Africa, and the Tolukuma Section in Papua New Guinea. We also have exploration projects in South Africa, Papua New Guinea and Australia, though our principal focus is on our operations in South Africa. Gold currently accounts for more than 14% of the value of total South African exports. South Africa is the world's largest producer of gold, with an annual production of more than 400 tons according to the World Gold Council.

        Our registered office and business address is 45 Empire Road, Parktown, Johannesburg, South Africa, 2193. The postal address is P.O. Box 390, Maraisburg 1700, South Africa. Tel. (+27 11) 381-7800, Fax (+27 11) 482-4641. We are registered under the South African Companies Act, 1973 (as amended) under registration number 1895/000926/06. For our ADRs, the Bank of New York, 101 Barclay Street., New York, NY 10286 has been appointed as agent.

        We are a public company, formed on February 16, 1895 and our shares were listed on the JSE that year. In 1898, our milling operations commenced with 30 stamp mills. In that year, we treated 38,728 tons of ore and produced 22,958 ounces of gold. We have focused our operations on the West Witwatersand basin which has been a gold production region for over 100 years. The Blyvoor Section and North West Operations, which is comprised of the Buffels Section and Harties Section, are predominantly underground operating mines located within the Witwatersrand Basin, exploiting gently to moderately dipping gold bearing quartz pebble conglomerates in addition to certain surface sources. The Crown Section, also located within the Witwatersrand Basin, exploits various surface sources, including sand and slime tailings deposited as part of previous mining operations.

        Our operational focus is to increase production, improve productivity and reduce costs. Our cash costs have decreased from an average of $258 per ounce of gold in 2000 to $209 per ounce of gold in 2002. Since 1997, our production has increased from less than 170,000 ounces per year to in excess of one million ounces in fiscal 2002. We currently process approximately 0.3 million tons of ore per month from underground operations with an average recovery of 0.215 ounces of gold per ton of ore. Surface production is derived from tailings dams and waste rock of approximately 1.8 million tons per month with an average recovery of 0.017 ounces of gold per ton of ore processed.

        Available proven and probable reserves as of June 30, 2002 were estimated at 16.3 million ounces, as compared to approximately 14.4 million ounces at June 30, 2001 representing a 13% increase. The increase in the average gold price during fiscal 2002 decreased the economically viable cut-off grade and thus increased our proven and probable reserves. We seek to upgrade resources to reserves through development and to acquire additional new reserves through acquisitions. Our metallurgical plants have a combined throughput capacity of 24 million tons per annum.

        We have had a number of changes in management and in the composition of our board of directors during the last year. Our reorganized management team has made important changes to our business, most notably, a major restructuring of our hedge book. We have embraced the South African government's drive for black empowerment and concluded a transaction with Kumho Bathong Holdings (Pty) Ltd, or KBH, involving the sale of a 60% share of our interest in CGR. We also took positive steps to start growing our asset base and making our production profile more sustainable. For example we accelerated our exploration programs at the Tolukuma and Harties Sections. We re-commissioned

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the No. 6 shaft at the Harties Section and, through a new decline, accessed additional reserves. The expansion program at the Blyvoor Section has resulted in new mining areas being accessed and the ore reserves increasing.

        As a result of the increase in our proven and probable reserves, the life at the Blyvoor Section has been extended from 12 to 26 years; the life at the Buffels Section is eight years, and the Harties Section now has a life of ten years compared with less than one year when we acquired it in 1999. We believe the results are indicative of our focus and strategy under our reorganized management team.

Our History and Development

        In 1992, our holding group (Rand Mines) was restructured and a new company, Randgold & Exploration Company Limited, or Randgold, was formed to provide management services to our gold mines.

        During 1996, we acquired the entire share capital of West Witwatersrand Gold Holdings Limited, which was the parent company of West Witwatersrand Gold Mines Ltd or West Wits, in exchange for an aggregate of 1,846,087 ordinary shares. Simultaneously with this transaction, we acquired the Consolidated Mining Corporation Ltd's loan to West Witwatersrand Gold Holdings Limited and the entire issued capital and shareholders' claim and loan account of East Champ d'Or Gold Mine Ltd, a gold mining company with mining title in the West Rand.

        Also during 1996, our ADRs began trading on the Nasdaq National Market. However, in December 2000, we received notice from the Nasdaq Stock Market, Inc. of its intention to de-list our ADRs from the Nasdaq National Market due to the fact that the ADRs were consistently trading below the required minimum bid price of $1.00. In February 2001, we decided to voluntarily remove our ADRs from the Nasdaq National Market. Our ADRs are now listed on the Nasdaq SmallCap Market.

        In August 1997, we purchased the mineral rights represented by the Argonaut Project from Randgold.

        On September 15, 1997, we acquired the entire share capital of Blyvooruitzicht Gold Mining Company Ltd, or Blyvoor, in exchange for 12,693,279 ordinary shares, calculated at a ratio of 25 ordinary shares for every 100 Blyvoor shares. Also on September 15, 1997, we acquired Buffels in exchange for 14,300,396 ordinary shares, calculated at a ratio of 110 of our ordinary shares for every 100 Buffels ordinary shares.

        On September 14, 1998 we acquired Crown in exchange for 5,925,139 ordinary shares, calculated at a ratio of 11.55 of our ordinary shares for every 100 Crown linked units. A Crown linked unit was comprised of one Crown ordinary share and one Crown unsecured variable-rate debenture, due November 10, 2003, then valued at R3.00.

        On August 16, 1999, Buffels acquired the majority of the assets and liabilities of the Harties mining operation from Avgold Limited, a South African mining company, for R45 million.

        During September 1999, we purchased 28,693,002 (19.9%) ordinary shares in Dome Resources Ltd, or Dome, for R34.9 million ($3.3 million). On March 13, 2000 we made an unconditional offer to the shareholders of Dome to acquire all the shares in Dome which we did not already own. The offer consisted of one of our ordinary shares and A$0.80 cash for every nine Dome shares. The closing date for this offer was April 13, 2000 but the offer was extended as only 92% of Dome ordinary shares had been acquired. We completed this acquisition in June 2001.

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        During August 2000, our management decided to cease all operations at the Durban Deep Section and both underground and open pit operations at the West Wits Section. This decision was taken after the South African government withdrew the water pumping subsidy. Without the subsidy, mining at the Durban Deep Section would become prohibitively expensive.

        In April 2001, we launched the Blyvoor Expansion Project. This project will facilitate the commissioning of additional infrastructure and the opening up of additional mining areas to further enable the effective mining of payable mineral resources at the Blyvoor Section. As a result of this anticipated increase in production, the life of the mine for the Blyvoor Section has been increased to 25 years.

        In June 2002, we entered into an agreement with Bophelo Trading (Pty) Limited, or BTL for the sale of the West Wits gold plant and certain related assets for R25 million ($2.4 million) to process certain sand dumps, surface materials, freehold areas and surface right permits located at the West Wits Section. We retain the right to mine underground by virtue of certain mining titles and mining authorizations on the property. The purchase price was to be paid in installments from September 30, 2002. As part of the agreement, we agreed to indemnify BTL against any loss, damage or expense which BTL might incur as a result of any liability in connection with the transferred assets, the cause of which arose prior to this sale. The sale is still pending and the agreement has not yet taken effect as a number of conditions precedent are still outstanding. We are re-negotiating the agreement with BTL to amend the payment terms of the purchase price and the payment of the purchase price has been suspended by agreement until these negotiations are complete.

Important Events in the Current Year

        During February and May 2002, we conducted private placements for a total of 12,000,000 of our ordinary shares. The net proceeds of these private placements was R445.5 million ($42.2 million) which we used to partially fund a major restructuring of our hedgebook.

        During the course of the audit exercise for the 2000 fiscal year, certain irregular transactions came to our attention. An internal investigation commenced at the insistence of a special committee of the board of directors. During the course of this investigation, we discovered that all 8,282,056 ordinary shares issued ostensibly for the acquisition of the Rawas gold mine in 1999 were invalidly issued and allotted. At a shareholders' meeting, our shareholders resolved, by special resolution, that we should apply to the High Court of South Africa for validation of the issuance of the ordinary shares. We have made this application and the High Court of South Africa validated the issuance on June 19, 2002.

Important Subsequent Events

        Effective July 1, 2002, we engaged in a transaction consistent with our black empowerment strategy by entering into a share purchase agreement with Crown Consolidated Gold Recoveries Ltd, or Crown, Industrial Development Corporation of South Africa, or IDC, and KBH. Under this share purchase agreement, we sold 57% of our interest in CGR to IDC and 3% of our interest in CGR to KBH. KBH obtained an option to purchase IDC's shares of CGR. IDC and KBH also each purchased their respective share of three shareholder loans, aggregating R190.1 million ($18 million) owed by CGR to us.

        As part of this transaction, we loaned KBH R5.3 million ($0.5 million) to fund its initial purchase of 3% of our interest in CGR. The loan bears interest at the prime rate of The Standard Bank of South Africa on overdraft plus 3%. At November 30, 2002 the interest rate on the loan stood at 20% and the outstanding balance was R5.7 million ($0.6 million). This loan has a term of five years from

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July 1, 2002 and is repayable on demand. This loan was secured by a pledge of 48,928,824 shares of ERPM held by KBH. However, since the acquisition of ERPM by CGR, the loan is no longer secured.

        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 us and 60% by KBH. Also, as part of this transaction, KBH repaid to IDC 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 us.

        Also as part of this transaction, KBH subscribed for 4,794,889 of our ordinary shares for a cash subscription price of R68 million ($6.4 million). The subscription agreement entered into by us and KBH places restrictions on KBH's ability to sell or otherwise dispose of these shares.

        In October 2002, CGR entered into an agreement to acquire 100% of the outstanding share capital of and loan accounts in ERPM for R100 million ($9.5 million). This transaction has been approved by the South African competition authorities. In connection with this transaction, we have provided ERPM with a loan of R10 million ($0.9 million). In addition, an amount of R60 million ($5.7 million) was lent by us to CGR which CGR paid to the then shareholders of ERPM as an interest free loan. CGR has 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 have approved the transaction and the R60 million ($5.7 million) loan is deemed to be part payment of the purchase price of R100 million ($9.5 million) by CGR for the acquisition of the shares and the claims of ERPM.

        On November 12, 2002 we issued $66,000,000 of 6% Senior Convertible Notes due 2006, in a private placement. We 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 into our ordinary shares, or, under certain conditions, American Depositary Receipts, or ADRs, at a conversion price of $3.75 per share or ADR, subject to adjustment in certain events. We are entitled to redeem the notes at their accreted value plus accrued interest, if any, subject to certain prescribed conditions being fulfilled, after November 12, 2005. We offered the notes only to qualified institutional buyers in reliance on Rule 144A of the Securities Act of 1933, as amended, or the Securities Act, and to non-U.S. persons in reliance on Regulation S under the Securities Act.

        On December 13, 2002, we requested that Deloitte & Touche resign as our independent auditors. Deloitte & Touche have indicated orally to us that effective December 31, 2002, they intend to resign. In response to this, we have engaged KPMG as our new independent accountants effective January 1, 2003, pending Deloitte & Touche's written resignation. Our Audit Committee recommended, and our Board of Directors authorized and approved, the decision to accept the resignation of Deloitte & Touche and to replace them with KPMG.

        The reports of Deloitte & Touche on our financial statements for the past two fiscal years have contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.

        In connection with our audits for the two most recent fiscal years there have been no disagreements between us and Deloitte & Touche on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Deloitte & Touche would have caused Deloitte & Touche to make reference thereto in its reports on our financial statements for such years.

        During the two most recent fiscal years there have been no reportable events with regard to us.

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        During the two most recent fiscal years, neither we nor any other person on our behalf has consulted with KPMG LLP on any application of accounting principles or any other matter set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K under the Securities and Exchange Act of 1934, as amended.

        On December 16, 2002 we announced our proposed acquisition of 14% of Emperor Mines Limited, an Australian listed gold mining company for A$11.5 million ($7.8 million). Emperor Mines Limited produces about 150,000 ounces of gold a year from its Vatukoula mine in Fiji. As part of the acquisition we will have the right to appoint two members of the eight member board of Emperor Mines Limited. This acquisition is subject to the approval of the South African Reserve Bank.

B.    Business Overview

Strategy

        Our business strategy is to continue to provide controlled, well-managed growth and establish a reputation of strong corporate governance. The following are the key elements of this strategy:

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Increasing Gold Production .    We intend to increase gold production from our existing operations through capital expenditure programs that will extend the economic lives of our gold mines and supplement our planned organic growth. These programs include upgrading our treatment plants and accessing new mining areas in and around our existing operations.



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Conduct Exploration Activities.     We will continue our exploration activities to accelerate the conversion of ore resources to ore reserves. Over the longer term we intend to increase our gold production by exploring in areas which are adjacent to our existing operations in South Africa, commonly referred to as brownfields developments. We also plan a brownfields exploration program including a detailed examination of the deep-level gold deposit in southern Johannesburg known as the Argonaut Project.



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Acquire Gold Producing Assets.     We plan to accelerate our organic growth with cost-effective acquisitions by acquiring gold producing businesses or companies. Criteria for investment will include favorable financial returns and compatibility with our existing business.



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Reducing Gold Production Costs.     Our strategy includes reducing production costs by continuing to employ rigorous cost controls and management of working capital and input costs. We believe costs can be reduced by improving our utilization of existing infrastructures and implementing a flat management structure that is focused on reducing administrative costs and managing ore reserves in a manner that allows for effective grade control. We also intend to reduce operational risk by a number of physical measures, such as increased planned maintenance, equipment improvements and asset protection.



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Providing Exposure to Gold Price.     Our objective is to build a company which offers investors a high level of gearing to the gold price combined with prudent financial safeguards. To accomplish this we have undertaken a major restructuring of our hedge book. Our investors now have an increased participation in any rise in the price of gold and we do not intend to cause this to change. We have retained some protection against a decrease in the price of gold and we will consider protecting our marginal production and capital programs as appropriate.



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Corporate Governance.     Our reorganized management team intends to stay vigilant in our corporate governance, continuing to comply with international standards and maintaining regular and substantive communications with all stakeholders. We have instituted a new Health and

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Safety policy, Training and Skills development and a proactive Black Empowerment initiative, all overseen by an independent board of directors.

        CGR's acquisition of ERPM is an example of our acquisition strategy. We have provided financial support for the transaction as well as the managerial expertise to run the operation. ERPM is an under-performing mine located to the east of Johannesburg with extensive underground workings and a number of surface tailings dams and dumps. This transaction offers:

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opportunity to increase future CGR gold production;



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potential for cost reductions under our management through our mining techniques and cost control process;



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operational synergies with CGR which should allow ERPM to reduce production costs;



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attractive financial returns based on the acquisition price for the identified gold reserves and resources; and



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demonstrable evidence of our commitment to Black Empowerment.

West Witwatersrand Basin Geology

        Blyvoor Section and North West Operations (comprising Buffels Section and Harties Section) are predominantly underground operating mines located within the Witwatersrand Basin, exploiting gold bearing reefs in addition to certain surface sources. Crown Section, also located within the Witwatersrand Basin, exploits various surface sources, including sand and slime tailings deposited as part of historical mining operations. Our underground operations are typical of the many operations in the area which together have produced some 40,000 tonnes of gold over a period of more than 100 years.

        The Witwatersrand Basin comprises a 6km vertical thickness of sedimentary rocks situated within the Kaapvaal Craton, extending laterally for some 300km east-northeast and 100km south-southeast. The sedimentary rocks generally dip at shallow angles towards the center of the basin though locally this may vary. The Witwatersrand Basin is Archaean in age and the sedimentary rocks are considered to be approximately 2.7 to 2.8 billion years old.

        Gold mineralization in the Witwatersrand Basin occurs within horizons termed reefs. These occur within seven separate goldfields located along the eastern, northern and western margins of the basin. These goldfields are known as the Evander Goldfield, the East Rand Goldfield, the West Rand Goldfield, the Far West Rand Goldfield, the Central Rand Goldfield, the Klerksdorp Goldfield and the Free State Goldfield. As a result of faulting and other primary controls of mineralization, the goldfields are not continuous and are characterized by the presence or dominance of different reef units. The reefs are generally less than 2m thick and in certain instances, these deposits form stacked elastic wedges which are tens of meters thick.

        The gold generally occurs in native form within the various reefs, often associated with pyrite and carbon.

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Description of Our Mining Business

Exploration

        Exploration activities are focused on the extension of existing orebodies and identification of new orebodies both at existing sites and at undeveloped sites. Once a potential orebody has been discovered, exploration is extended and intensified in order to enable clearer definition of the orebody and the portions with the potential to be mined. Geological techniques are constantly refined to improve the economic viability of exploration and exploitation.

Mining

        The mining process can be divided into two main phases: (i) creating access to the orebody and (ii) mining the orebody. This basic process applies to both underground and surface operations.

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Access to the orebody .    In underground mines, access to the orebody is by means of shafts sunk from the surface to the lowest economically and practically mineable level. Horizontal development at various intervals off a shaft (known as levels) extends access to the horizon of the reef to be mined. On-reef development then provides mining access.

        In open-pit mines, access to the orebody is provided by overburden stripping, which removes the covering layers of topsoil or rock, through a combination of drilling, blasting, loading and hauling, as required.

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Mining the orebody .    The process of ore removal starts with drilling and blasting the accessible ore. The blasted faces are then cleaned and the ore is transferred to the transport system. In open-pit mines, gold-bearing material may require drilling and blasting and is usually collected by loaders or shovels to transfer it to the ore transport system.

        In underground mines, once ore has been broken, scraper systems collect ore from the faces and transfer it to a series of ore passes which gravity feed the ore to hoisting levels at the bottom of the shaft. The ore is then hoisted to the surface in dedicated conveyances and transported either by conveyor belts or other surface systems to the treatment plants. In addition to ore, waste rock broken to access reef horizons must similarly be hoisted and then placed on waste rock dumps. In open-pit mines, ore is typically transported to treatment facilities in large capacity vehicles.

Our Metallurgical Plants and Processes

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North West Operations

        Metallurgical processing facilities at our North West Operations include four operating plants one serving the Buffels Section, known as the Buffels Plant, and three serving the Harties Section, namely the No. 2 Gold Plant, or 2GP, the Low Grade Gold Plant, or LGGP, and the No. 7 Gold Plant or 7GP. These have a combined operating capacity of 711,000 tonnes per month, or tpm. Currently 2GP treats underground sources with LGGP and 7GP processing surface sources. LGGP also treats oversize screened ore from 2GP feed.

        Buffels Plant:     Commissioned in 1957, the original plant comprised of a conventional circuit including multi-stage crushing and grinding followed by standard dissolution and recovery circuits. The plant was modified from 1994 to 1997 through the closure and demolition of the original comminution sections. This allowed early recovery of clean-up gold and the commissioning of a modern semi-autogenous, or SAG, milling circuit.

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        The current circuit comprises a split stream for milling surface sources and underground ore prior to conventional thickening, cyanide leaching, filtration, zinc precipitation through a Merrill Crowe system and smelting to doré. Both waste and underground milling circuits consist of dedicated SAG mills operating in closed circuits with hydocyclones. The surface sources mill product is further enriched through a flotation circuit, the concentrate being combined with the milled underground ore prior to the leach circuit. The current operating capacity is approximately 310,000tpm which is split as 54,000tpm and 256,000tpm for the underground and surface materials respectively. As a result of the relatively recent commissioning, the comminution and flotation circuits are in a very good condition both mechanically and structurally.

        2GP:     Commissioned in 1954, this plant is comprised of a circuit including multi-stage crushing and milling, flotation, leaching, filtration, zinc precipitation and smelting to doré. The pyrite concentrate from the flotation circuit undergoes cyanidation, during which the majority of gold dissolution takes place. The flotation residues are further processed through a slimes leach circuit. Pyrite concentrates are subsequently oxidised through a roasting operation with sulphuric acid being produced as a by-product and the resultant calcine undergoing further cyanidation for additional gold recovery. We recently de-commissioned the Kemix pumpcell scavenging plant. The operating capacity of the plant is 160,000tpm. This plant is in need of extensive upgrades. It is our intention to demolish this plant at the same time as 7GP. Underground material will then be transferred to LGCP for processing.

        LGGP:     Commissioned in 1987, this plant is comprised of a circuit including crushing, closed circuit milling, thickening, cyanidation and gold recovery in a Carbon-In-Pulp, or CIP, plant, elution, electrowinning and smelting to doré. The current operating capacity of the plant is 155,000tpm.

        7GP:     Commissioned in 1963, this plant is comprised of a circuit including crushing and milling closed by hydrocyclones, and pyrite flotation producing a concentrate for transportation by road tanker to 2GP, where it is further treated in the pyrite section for gold and sulphruic acid production. Sulphur is currently added to the flotation plant feed to improve flotation performance and produce a concentrate capable of being processed through the acid plant circuit. The current operating capacity of the plant is 86,000tpm. Recently, this plant has been used to mill open pit material for cyanidation at 2GP. This plant is in need of extensive upgrades. It is our intention to demolish this plant, along with 2GP, when the supply of rock dump and open pit material is exhausted.

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Blyvoor Section

        Commissioned during 1969 following relocation as a result of sinkhole formations on the original site, the current plant has an operating capacity of 200,000tpm. This capacity has been recently exceeded. As a result, the maximum throughputs are projected at 207,000tpm. We consider that despite the projected tonnage exceeding the plant capacity in the short term, with sustained plant availability in line with historical achievement and with the four-shift system in place the plant facilities are appropriate to meet the life of mine requirements.

        Metallurgical processing facilities at Blyvoor Section are comprised of a single metallurgical plant. The process route is based on a conventional flowsheet comprising multi-stage crushing, open circuit primary and closed circuit secondary milling with hydrocyclones, thickening and cyanide leaching in a Carbon-in-Pulp, or CIP, carousel arrangement. The gold is recovered through electrowinning followed by smelting to doré. The circuit was recently modified by the closure of the original gold recovery system and the commissioning of a modern carbon Kemix Pump-cell plant.

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Crown Section

        Metallurgical processing facilities at Crown Section include three operating plants, known as the City Deep Plant, the Crown Plant and the Knights Plant. Additionally, after CGR's purchase of ERPM on October 10, 2002, the Crown Section also includes the ERPM plant. All of the plants have undergone various modifications during recent years resulting in significant changes to the circuits, specifically, the upgrading of sand sources and currently have sufficient combined operating capacity for the leaching circuits.

        City Deep Plant:     Commissioned in 1987, this plant is comprised of a circuit including screening, primary, secondary and tertiary cycloning in closed circuit milling, thickening, oxygen preconditioning, Carbon-in-Leach or CIL, elution and zinc precipitation followed by calcining and smelting to doré. In 1998, the plant was converted to a slimes only operation. However, due to operational difficulties caused by the particulate nature of the slimes, the milling circuit has subsequently been recommissioned to facilitate the treatment of sand. The current operating capacity of the plant is 200,000tpm.

        Crown Plant:     Commissioned in 1982, this plant has already been modified and is comprised of a circuit including screening, primary cycloning, open circuit milling, thickening, oxygen preconditioning, CIP and CIL, elution, zinc precipitation followed by calcining and smelting to doré. The current operating milling capacity of the plant is 310,000tpm (leach circuit 450,000tpm).

        Knights Plant:     Commissioned during 1988, the circuit comprises screening, primary cycloning, spiral pre-concentration, milling in closed circuit with hydrocyclones, thickening, oxygen preconditioning, CIL, elution, electrowinning and smelting to doré. The current operating capacity of the plant is 320,000tpm.

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West Wits Section

        The metallurgical plant at West Wits was taken over by Crown for processing sand dumps only during 2000. Underground and open-cast mining ceased at this section in August 2000. In June 2002, we entered into an agreement with BTL for the sale of the West Wits gold plant and certain related assets.

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Tolukuma Section

        The Tolukuma plant was built in 1995. It is a compact plant as it is located on the top of a very steep sided mountain. The plant consists of a closed circuit SAG mill that is capable of processing 18,000tpm. There is no thickener in circuit and the cyclone overflow reports directly to a CIL plant. Cyanide in the residue is neutralized in a detoxification plant prior to riverine discharge. The loaded carbon is eluted in an AARL elution plant. About 25% of the gold is recovered in the milling circuit using a Knelson concentrator.

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Marketing

        All gold produced by our South African operations is sold by the Rand Refinery Ltd, after refining under an agreement signed by us in October 2001. At our various operations the gold bars which are produced consist of approximately 85% gold, 7-8% silver and the balance copper and other common elements. The gold bars are sent to the Rand Refinery Ltd for final refining where the gold is purified to 99.9% purity and cast into troy ounce bars of varying weights. Rand Refinery Ltd then sells the gold for the London afternoon fixed price on the day the gold is sold. In exchange for this service, we pay Rand Refinery Ltd a variable refining fee plus fixed marketing, loan and administration fees. We currently own 10.6% of Rand Refinery Ltd (which is jointly owned by South African mining companies) and Mr. Ian Murray, one of our executive directors, is also a director of Rand Refinery Ltd.

        The gold produced in Papua New Guinea is sold directly to N.M. Rothschild under an agreement signed by us in December 2001. Proceeds for gold sold are received within two days. The selling price is determined by the previous day's London afternoon fixed price and we are paid in Dollars.

        The mineral resource is reported by the mineral resource staff of each mine and the reports are compiled by the mine manager. The Tolukuma Mine mineral resource is reported by Michael John Bird, Chief Exploration Geologist.

        The ore reserve is inclusive of diluting materials and allows for losses that may occur when the material is mined. Ore reserve tons, grade and content are quoted as delivered to the gold plant. The cut-off grade is based upon direct costs from the mining plan, taking into consideration production levels, production efficiencies and the budgeted costs. We utilize two types of pay-limits. The first is full pay-limit, which includes all the costs, mining processing and overhead to calculate the full pay-limit grade. The second is the marginal pay-limit which only includes mining and processing costs to calculate the marginal pay-limit grade, resulting in a lower figure than the full pay-limit grade.

        Our ore reserves figures are estimates, which may not reflect actual reserves or future production. We have prepared these figures in accordance with the industry practice, converting mineral resource estimates to an ore reserve through the preparation of a mining plan. The ore reserve estimates

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contained herein have been determined and valued based on assumed future gold prices, cut-off grades and operating costs that may prove to be inaccurate. However, estimates inherently include a degree of uncertainty and depend to some extent on statistical inferences, which may prove unreliable.

        Reserve estimates require revisions based on actual production experience or new information. Should we encounter mineralization or formations different from those predicted by past drilling, sampling and similar examinations, reserve estimates may have to be adjusted and mining plans may have to be altered in a way that might adversely affect our operations. Moreover, if the price of gold declines, or stabilizes at a price that is lower than recent levels, or if our production costs increase or recovery rates decrease, it may become uneconomical to recover ore reserves containing relatively lower grades of mineralization. Under these circumstances, we would be required to re-evaluate our ore reserves. Moreover, short-term operating factors relating to the ore reserves, such as the need for sequential development of ore bodies and the processing of new or different grades, may adversely affect our profitability in any particular accounting period.

        The international mining consulting firm of Resource Service Group has audited the 2002 ore reserves, to the extent of our current mining plans.

        Based on an assumed gold price of $320 per ounce and an assumed exchange rate of R10 to $1.00 our total attributable proven and probable ore reserves at June 30, 2002 are as follows:

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(1)

Reflects our attributable 40% interest in the Crown Section, subsequent to our sale of 60% in the Crown Section with effect July 1, 2002.

Recent Capital Investments

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In July and October 1999, we issued a total of 8,282,056 ordinary shares, to various creditors of Laverton Gold NL and its subsidiary PT Barisan Tropical Mining. The creditors to whom such ordinary shares were issued included CAM and Continental Goldfields NL. These ordinary shares were ostensibly issued pursuant to the planned acquisition of Rawas, a gold mine located in Indonesia.

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After acquiring an initial 19.9% investment in Hargraves Resources NL, or Hargraves, for R33.6 million ($3.2 million) we announced on July 12, 1999 our intention to make a bid to acquire all of the outstanding shares of Hargraves. On September 15, 1999, the bid, consisting of one ordinary share and A$0.70 for every seven Hargraves shares was launched. We issued 12,702,835 ordinary shares at an aggregate value of approximately R115 million ($10.9 million) in connection with this acquisition. Additionally, we entered into a A$10 million loan facility with N. M. Rothschild & Sons (Australia) Limited, or Rothschild, for the cash portion of the acquisition. During January 2001, we issued 9,554,950 ordinary shares for cash in order to repay the A$10 million loan, as well as a convertible note in the principal amount of A$2 million ($1.2 million) issued by Hargraves to Rothschild and guaranteed by us.

•

During September 1999, we purchased 28,693,002 (19.9%) ordinary shares of Dome for R35 million ($3.3 million). On March 13, 2000 we made an unconditional offer to the shareholders of Dome to acquire all the shares in Dome which we did not already own. The offer consisted of one ordinary share and A$0.80 cash for every nine Dome shares. The closing date for this offer was April 13, 2000 but the offer was extended because only 92.04% of Dome ordinary shares had been acquired. We completed this acquisition in June 2001. A total of 12,514,101 new ordinary no par value shares were issued by us at a cash price of R9.85 per share and R87.5 million ($8.3 million) in cash was paid.

•

On October 10, 2002, CGR entered into an agreement to purchase the entire issued share capital and all shareholder claims of ERPM. The purchase price of the acquisition is R100 million ($9.5 million).

•

On December 16, 2002 we announced our proposed acquisition of 14% of Emperor Mines Limited, an Australian listed gold mining company for A$11.5 million ($7.8 million). This acquisition is subject to the approval of the South African Reserve Bank.

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Labor Relations

        We currently employ and contract approximately 21,000 people, approximately 70% of whom are members of trade unions or employee associations. This includes all employees of CGR but excludes employees at ERPM.

        South Africa's labor relations environment remains a platform for social reform, while the political transitions that have taken place in the country have reduced the impact of organized labor on political transformation. National Union of Mineworkers, or NUM, the major union in the mining industry in South Africa, 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 of COSATU. A two-year wage agreement for 2001-2003 has been signed with all unions and associations, which provides for a 7% wage increase over each year of the agreement.

Labor Productivity and Medical Costs

        The present Mine Health and Safety Act, 1996 (as amended), or the Mine Health and Safety Act, came into effect in January 1997. The principal object of the Mine Health and Safety Act is to improve health and safety at South African mines and to this end, the Mine Health and Safety Act imposes various duties on us at our mines, and grants the authorities broad powers to, among other things, close unsafe 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 have a material and adverse effect on our operations.

        Under the Compensation for Occupational Injuries and Diseases Act, 1993 (as amended), or COID Act, employers are required to contribute to a fund specifically created for the purpose of compensating employees or their dependants for death or disability arising in the course of their work. We have contributed approximately R58 million ($5.5 million) over the past three fiscal years under the COID Act. Employees who are incapacitated in the course of their work have no claim for compensation directly from the employer, and must claim compensation from the COID Act fund. Employees are entitled to compensation without having to prove that the injury or disease was caused by negligence on the part of the employer, although if negligence is involved, increased compensation may be payable by this fund. The COID Act relieves employers from the prospect of costly damages, but does not relieve employers from liability for negligent acts caused to third parties outside the scope of employment.

        Under the Occupational Diseases in Mines and Works Act, 1973 (as amended), or the Occupational Diseases Act, the fund created pays compensation to employees of mines performing "risk work" (which is work declared to be "risk work" by the Minister for Health, usually in circumstances where the employee is exposed to dust, gases, vapors, chemical substances or other working conditions which are potentially harmful), if the employee contracts a "compensatable disease" (which includes pneumoconiosis, tuberculosis, a permanent obstruction of the airways, and any other disease declared to be so by the Minister for Health). No employee is entitled to benefits under the Occupational Diseases Act for of any disease for which compensation has been received or is still to be received under the COID Act.

        In the future, compliance with the Mine Health and Safety Act and the COID Act may require significant expenditures which could have a material and adverse effect on our operations.

        Uranium and radon are often encountered during the ordinary course of mining operations in South Africa, and present potential risks of exposure of workers at those operations and the public to radiation. We monitor our uranium and radon emissions, and believe that we are currently in substantial compliance with all local laws and regulations pertaining to uranium and radon management

26

and that it is within the current legislative exposure limits prescribed for workers and the public, under the Nuclear Energy Act, 1999 (as amended) and Regulations from the National Nuclear Regulator.

        AIDS represents a very serious threat to us and the industry in South Africa as a whole in terms of the potential reduced productivity and increased medical costs. The exact extent of infection in our workforce is not known at present, although it is roughly estimated by the industry that the prevalence of HIV, the virus that causes AIDS, in the industry is currently about 37%. We have several AIDS awareness campaigns in place at our operations.

Political Issues, Governmental Policies and Their Effect on our Business

South Africa

Common Law Mineral Rights and Statutory Mining Rights

        Ownership of mineral rights and statutory mining rights in South Africa may be effected through the common law or by statute. Under the common law, mineral rights vest with the owner of the land. The common law recognizes that mineral rights may be severed from title to land, rendering it possible for the surface rights, the rights to precious metals and the rights to base minerals to be owned by different persons.

        Earlier mining legislation, which has since been repealed, provided for the granting, by way of mining leases, of statutory rights to mine for precious metals. Despite the repeal of this earlier legislation, mining leases continue to be valid under the terms of the Minerals Act, 1991 (as amended), or the Minerals Act.

        Registration of title to minerals ensures that real rights are constituted in and to the minerals concerned. Upon registration, those rights (either common law mineral rights or statutory mining rights) become effective against third parties. Registered title may be obtained in a number of ways. For example, where mineral ownership has been separated from land ownership, registered title to the common law mineral rights is obtained by the registration of such ownership in the Deeds Registry Office. Alternatively, where a person has acquired statutory mining rights pursuant to a mining lease, registered title to the statutory mining rights is effected after receipt of the necessary consent from the Minister and by registration of those rights in the Mining Titles Office.

        The Minerals Act currently governs prospecting and mining activities in South Africa. The Minerals Act provides that statutory mining rights supersede the common law mineral rights. Thus, pursuant to the Minerals Act, the holders of statutory mining rights are deemed to be the common law holders of the mineral rights.

Mining Authorizations

        Under the Minerals Act, no person or mining entity may prospect or mine for minerals without being granted a prospecting or mining authorization under the Minerals Act. Prior to granting a prospecting or mining authorization, two requirements must be fulfilled. First, the mining entity must either be the registered holder of the mineral rights or have obtained the written consent of the registered holder of the mineral rights to mine the minerals concerned for its own account. Second, the Department of Minerals and Energy, or the Department must be satisfied with the scale, manner and duration of the intended prospecting or mining operations and must approve an Environmental Management Program, or EMP. A prospecting permit is issued for a limited period but may be renewed on application. A mining license is generally issued until the minerals can no longer be viably economically mined.

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Future Legal Developments

        The Mineral and Petroleum Resources Development Bill, or the Bill was assented to by the President on October 4, 2002. The Department is however unclear as to when it will come into effect. In order to ensure proper administration promulgation can only take place once the Money Bill, amendments to the Mining Titles Registration Act, 1967 (as amended), or the Act, Regulations and the Mining Charter have been completed.

        The Money Bill is currently being drafted by the Department of Finance (Treasury) to provide for the manner in which royalty payments payable by the holder of a prospecting or mining right to the State will be determined. The Money Bill was initially expected to be published for comment before the end of this year. However, this has not yet occurred. The Department has a draft of the amendments to the Act but the drafting team still requires further meetings before the amendments can be finalized. The Department of Minerals and Energy is intending to extensively amend the Act. These amendments are needed to bring the provisions contained in the Act in line with those contained in the Bill. The Regulations are also required prior to promulgation of the Bill so as to give effect to certain provisions of the Bill like the prescribed social and labor plan and the terms and conditions of prospecting and mining rights. The final draft of the Mining Charter was submitted to the President of South Africa for review on October 4, 2002. It was published on October 9, 2002.

        The President of South Africa has said that empowerment in the mining industry is a matter of black participation and not nationalization. Black participation would have to take into account fair market value of the affected assets. The key elements of the Mining Charter are: human resources development, employment equity, access to finance and technology, ownership, access to viable deposits, socio-economic issues, beneficiation strategy and mineral specific constraints. The Mining Charter requires that ownership of 26% of the mining assets of each operation must vest in HDSAs within ten years of enactment of the Bill. The Minister will consider a number of ownership criteria in considering the granting of a prospecting or mining right such as employment equity and human resource development. The transfer of ownership must be transparent and for fair market value. The industry has committed to assist HDSA's in securing finance to fund participation in an amount of R100 billion within the first five years of enactment of the Bill.

        The Bill proposes that the State will become the custodian of all South Africa's mineral resources. The State will have the right to grant, control and administer access to those mineral resources. Royalties are payable to the State in consequence of exercising the prospecting and mining rights to be granted under the Bill, when enacted. Ensuring security of tenure for existing operations is a primary objective of the Bill in view of it extinguishing ownership of mineral rights in a phased manner. All existing prospecting operations have two years and existing mining operations have five years after enactment of the Bill, to convert existing rights to prospect or mine in order to bring those rights within the proposed new order. We will have to comply with a number of requirements to effect such conversion which will be based on the principle of "use it and keep it", including the provisions of the Charter and prescribed social and labor plans. We are unable to indicate fully to what extent these requirements will impact on our operations due to the Money Bill, the amendments to the Act and the Regulations not having been made public as yet.

        We believe that security of tenure, in consequence of substituted rights being granted under the provisions of the Bill (when enacted), will be achieved in respect of our Buffels and Blyvoor operations. In respect of our Argonaut Project, we still have to submit an application for a prospecting permit. However before being in a position to do so, we have to obtain the consent of the local authority and have to engage in a public consultation process with interested and effected parties as a result of the project underlying residential township areas. It is possible that as a result of these requirements that a delay of six to eight months is incurred before we will be in a position to submit our application for a prospecting permit. If the Bill is enacted in the interim, we will have a year within which to apply for a

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prospecting permit under the new mining regime and if the application is not submitted within the one year period or is refused, our registered title to the mineral rights falling within the Argonaut Project will be extinguished.

        We could be materially affected by an adverse change in the current level of political stability or an adverse change in the economic or social outlook of South Africa or its government. Our ability to raise equity funding or expatriate funds from South Africa may be affected by the South African exchange control regulations. However, since the first democratic election in 1994, and continuing after the elections of 1999, the political and economic environment in South Africa has improved.

Papua New Guinea

        The Tolukuma Section has been developed in accordance with an environmental plan approved by the Papua New Guinea authorities. We believe the project presently complies in all material respects with all environmental requirements. The major environmental issues facing the Tolukuma Section are associated with the riverine discharge of tailings residue and polluted mine water into the Auga/Angabanga river system. The discharge of tailings and waste water into the river system could result in elevated concentrations of cyanide, as well as potentially toxic concentrations of mining related heavy metals like arsenic, lead, mercury and zinc, manifesting itself with a potential negative impact on the aquatic fauna and the human population utilizing this river system.

        In order to mitigate this potential negative impact, the discharge of cyanide into the river system is managed by a sophisticated tailings detoxification system whereby a cyanide concentration of less than 5 mg/liter is consistently achieved.

        In order to monitor the levels of heavy metal concentrations in the tailings residue, continuous monitoring as per the environmental monitoring and management program is conducted. Additionally, prior to introduction into the plant, the ore is sampled and high mercury and arsenic ore is blended within ore containing lower concentrations to ensure reduced concentrations of mercury and arsenic in tailings discharges.

        Finally, and in order to assess potential impacts on aquatic fauna, we commenced an aquatic fauna and metals in tissue survey in December 2002. We anticipate completing this survey by March 2003.

        Other environmental issues facing the Tolukuma Section relate to waste management, in particular waste rock dumps and the design and management of landfill sites. These impacts are, however, addressed according to the requirements of the Environmental Management Programme and following encapsulation and stabilization, the areas will be vegetated to blend in with the surrounding environment.

        Mineral exploration and mining operations in Papua New Guinea are principally regulated by the following legislation:

•

The PNG Mining Act, 1992 and Mining Regulations 1992, or the Mining Act;



•

The Mining Safety Act and Regulations;



•

The PNG Environmental Act 2000 and Regulations 2000, or the Environmental Act and Regulations; and



•

Environmental Code of Practice for the Mining Industry in Papua New Guinea—November 1999.

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The PNG Mining Act of 1992 and Mining Regulations 1992

        All current mining activities at the Tolukuma Section are covered by a mining lease (ML 104), granted under Section 38 of the Mining Act. The lease is granted for a term not exceeding 20 years and is renewable for further periods not exceeding 10 years. All current exploration activities are covered by an exploration license. The license has been granted for a term not to exceed two years but can be renewed for further two year periods. We are currently in the process of applying to the Papua New Guinea Department of Mining for a mining lease for the area covered by our exploration license. In total, there are ten exploration licenses covering the Tolukuma Section.

The Mining Safety Act and Regulations

        The Mining Safety Act and Regulations, sets out in detail the standards pertaining to safe and responsible mining. It lays down the conditions a mining operation has to comply with to ensure that the health and safety of all workers is protected. It includes requirements pertaining to worker training, risk assessment and safe working procedures with regard to all activities associated with mining.

        The total number of employees of 20,935 comprises 6,172 contractors and 14,763 employees who are directly employed by us and our group companies. The decrease in the number of employees from 2000 to 2001 was primarily due to the closure of the Durban Deep Section and the cessation of operations at the West Wits Section. The increase in the number of employees in 2002 is due to prior recruitment to accommodate the July 2002 mining plan at the North West Operations, the takeover of VTN contract employees and prior recruitment to accommodate the July 2002 mining plan at Blyvoor Section and the introduction of a development section (engineering) at Blyvoor Section.

        As of June 30, 2000, 2001 and 2002, the breakdown of our employees by main categories of activity was as follows:

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        The relationship between management and labor unions remains good. The DRD/NUM Consultative Forum has been established to discuss matters pertinent to both parties at group level, while operations level forums continue to deal with local matters.

        There were no material incidents of industrial action or labor unrest at our operations during fiscal year 2002.

        Contract labor at ERPM supported the COSATU national stay-away in October 2002 and organized to protest the South African government's privatization policies. Workers also proceeded with an unprotected wage strike from October 3, 2002 due to a misunderstanding regarding wage structure. Normal operations resumed on October 14, 2002.

C.    Organizational Structure, Property, Plants and Equipment

        The following chart shows our structure as of November 30, 2002. All of our subsidiaries are incorporated in South Africa unless otherwise indicated.

GROUP STRUCTURE

(1)

Incorporated in Australia.

(2)

Incorporated in Papua New Guinea.

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        Below are maps showing the locations of our mines and projects in South Africa and New Guinea.

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Description of Significant Subsidiaries, Properties and Mining Operations

        As of November 30, 2002, we had the following significant subsidiaries and operations:

South Africa

•

Buffelsfontein Gold Mines Ltd

        Buffelsfontein Gold Mines Ltd, or Buffels, was incorporated and registered as a public company in South Africa on September 20, 1995 under the name Camelian Investments (Pty) Ltd. As of December 31, 1995, Buffels acquired the assets and liabilities of the Buffelsfontein mine division of Buffelsfontein Gold Mines Company Limited previously managed by Gencor Limited, a South African mining company. We acquired Buffels on September 15, 1997. On August 16, 1999, Buffels acquired both the Harties business assets and the Hartebeestfontein Gold Mining Company Limited from Avgold Limited. Hartebeestfontein was incorporated as a public company in South Africa on June 20, 1949 and is now dormant. We refer to the Buffels and Harties Sections collectively as the North West Operations.

North West Operations

        The Buffels Section is located 100 miles southwest of Johannesburg near the towns of Stilfontein and Klerksdorp, North West Province, and is reached via the Johannesburg-Potchefstroom-Kimberley highway. The mine's infrastructure includes the shaft complexes, metallurgical plants and its associated tailings dams and engineering workshops. Accommodation for staff is situated on the property as well as in the neighboring towns of Stilfontein and Klerksdorp, where Buffels owns 111 houses. Buffels has mining title to 17,575 acres and owns 4,893 acres of freehold property.

        The Buffels Section is situated in the Klerksdorp goldfield of the Witwatersrand Basin. The mine was originally incorporated in 1949 and since inception has produced over 32 million ounces of gold, with 20,100 tons of uranium as a by-product.

        The Buffels and Harties Sections mine the Vaal Reef ore body and previously discarded low-grade rock dumps. In addition to mining its lease area, Buffels currently operates and mines the adjoining Harties mineral rights areas and another area pursuant to royalty-based tribute agreements with Lucas Block Minerals Limited, a South African company, and Harties.

        The bulk of the mine's ore reserves have been mined-out but the infrastructure is in good condition and is being used by Buffels to access remnant reserves and blocks originally bypassed because of structural complexity. Access from the surface to the current underground workings of the mine is through vertical and underground incline shafts. Mining of the reef takes place in stope panels. Holes are drilled into the solid rock and are charged with explosives and blasted. The loosened rock is removed from the stope panels and is conveyed to the shaft, tipped into the ore-pass systems, hoisted to the surface and conveyed to the metallurgical plant for gold extraction. Based upon an assumed gold price of $320 per ounce and an assumed exchange rate of R10 to $1, at June 30, 2002 proven and probable reserves of the Buffels Section were 1,330,000 ounces and we estimate that the life of the Buffels Section extends to the year 2010.

        The Harties Section is also located 100 miles southwest of Johannesburg near the towns of Stilfontein and Klerksdorp, North West Province. The mine infrastructure includes the shaft complexes, metallurgical plants and its associated tailings dams and engineering workshops. Accommodation for staff is situated on the property as well as in the neighboring towns of Stilfontein and Klerksdorp. The Harties Section contains mining title to 15,560 acres and owns 375 acres of freehold property, all held in the name of Buffels.

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        The Harties Section is situated in the Klerksdorp goldfield of the Witwatersrand Basin. Exploration, development and production dates back to 1949 with total gold production from the area totaling over 38 million ounces, with uranium oxide, sulfuric acid, pyrite and silver being recovered as by-products.

        Gold production at the Harties Section started in 1955 on the Vaal Reef. By the late 1990's the mine had reached a position where its life was dependent on the mining of shaft pillars and scattered remnants. Under our management, the mine has produced more than 1.1 million ounces of gold. Based upon an assumed gold price of $320 per ounce, and an assumed exchange rate of R10 to $1, at June 30, 2002 proven and probable reserves of the Harties Section were 7,084,000 ounces and we estimate that the life of the Harties Section extends to the year 2026.

        Buffels acquired the Harties mine on August 16, 1999. The Harties Section has been converted 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 in place a medium-term operational plan including the opening up of old mining areas for remnant mining, and thirdly, developing a sustainable life of mine plan that will be supported by areas not included in the previous owners' mining plan due to high pay limits and cut-off.

        The following table details the operating and production results from the North West Operations for the past three fiscal years.

(1)

Cash profit represents the difference between Revenues and Cash cost.

        North West Operations gold production for the 2002 fiscal year was 540,550 ounces as compared to 608,327 ounces for fiscal 2001 and 636,199 ounces for fiscal 2000. We were able to reduce cash costs to $219 per ounce of gold in fiscal 2002 from $231 per ounce of gold in fiscal 2001 and $244 per ounce of gold in fiscal 2000 through the review of the mining plan, introduced after we acquired the mine in August 1999. We believe additional potential exists within previously abandoned pillars, fault-loss areas, the mining of outcropping reefs and other opportunities which are aimed at increasing the life of the mine to more than ten years.

•

Blyvooruitzicht Gold Mining Company Ltd

        Blyvoor was incorporated and registered as a public company in South Africa on June 10, 1937 and owns two adjacent mines (Blyvooruitzicht and Doornfontein) located on the West Wits line, near the town of Carletonville, about 50 miles south-west of Johannesburg. Blyvoor acquired Doornfontein in November 1995 and the mineral rights representing the Western Deep Levels tribute area in December 1996. We acquired the entire share capital of Blyvoor on September 15, 1997.

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Blyvoor Section

        The Blyvoor Section is located in the Carletonville goldfields on the northwestern edge of the Witwatersrand Basin, Gauteng Province, approximately 50 miles west of Johannesburg. Its operating facilities are all situated on property belonging to it, and include the shaft complexes, administrative offices for the managerial, administrative, financial and technical disciplines, extensive workshops and consumable stores, the metallurgical plants, tailings dams and waste rock dumps.

        Blyvoor has mining title to 16,242 acres and owns 5,138 acres of freehold property. Blyvoor also houses the majority of its employees in Blyvoor-owned accommodations on the property and in the town of Carletonville. The normal support structures, including training, security, hospital, sport and recreational facilities, schools and churches are situated on the property.

        Mining is focused on two gold-bearing pebble horizons, the Carbon Leader Reef, which is one of the principal ore bodies in the goldfield, and the Middelvlei Reef, which occurs in discrete channels over parts of the lease area. The Blyvoor Section was established in 1937 to exploit the rich Carbon Leader Reef but by the late 1980's had reached a position where its own life was dependent upon the mining of scattered Carbon Leader Reef remnants and limited sections of the lower grade Middelvlei Reef.

        Access from the surface to the current underground workings of the mines is through vertical and incline shaft systems situated at the Blyvoor and Doornfontein mines. Doornfontein was previously a separate mine adjacent to the Blyvoor mine but has since been merged to form the Blyvoor Section.

        Mining of the reef takes place in stope panels. Holes are drilled into the solid rock and are charged with explosives and blasted. The loosened rock is removed from the stope panels and is conveyed to the shaft, tipped into the ore-pass systems, hoisted to the surface and transported to the metallurgical plant for gold extraction.

        The shaft system consists of three vertical shafts from the surface, twelve sub-incline shafts and two sub-vertical shafts underground. Of these nine incline shafts, only five are in operation and are used for the conveyance of personnel, pumping and hoisting of mined ore and waste.

        Two levels have been holed between the previous Doornfontein mine and workings within the Blyvoor lease extension (purchased in 1996 from Western Deep Levels Limited) to allow ore from the bottom of the Blyvoor workings to be trammed across and hoisted up Blyvoor No. 5 Shaft. From there, it is trucked to the gold plant.

        The merger with neighboring Doornfontein in October 1995, and the purchase of the mineral rights representing the Western Deep Levels Tribute area in December 1996, has increased Blyvoor's reserve and resource base substantially. Our focus is now on realizing the potential of the remaining ore body. Together, these two operations have produced over 35 million ounces of gold since inception. We anticipate that the new access to more efficient infrastructure, realized as a result of the merger with Doornfontein, combined with the anticipated benefits of the expansion project currently underway, will enable costs at the Blyvoor Section to eventually stabilize between $200 to $210 per ounce.

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        The following table details the operating and production results from the Blyvoor Section for the past three fiscal years.

(1)

Cash profit represents the difference between Revenues and Cash cost.

        The Blyvoor Section is currently undergoing a substantial expansion. This project will facilitate the commissioning of additional infrastructure and the opening up of additional areas to further enable the effective mining of payable mineral resources at the Blyvoor Section. We anticipate a significant increase in underground production and an increase in our cash costs, to approximately $212 for the 2003 fiscal year, from $184 per ounce for fiscal 2002 as a result of this project. The Blyvoor Section gold production for the 2002 fiscal year was 253,025 ounces as compared to 220,811 ounces in fiscal 2001 and 206,633 ounces in fiscal 2000. Based upon an assumed gold price of $320 per ounce and an assumed exchange rate of R10 to $1, at June 30, 2002 proven and probable reserves of the Blyvoor Section were 7,235,000 ounces and we estimate that the life of the Blyvoor Section extends to the year 2028.

•

Crown Consolidated Gold Recoveries Ltd

        Crown was incorporated in South Africa on May 23, 1997. Pursuant to a scheme of arrangement, we acquired Crown on September 14, 1998.

        On June 12, 2002, we entered into an agreement with the IDC, KBH, and Crown whereby, with effect from July 1, 2002 we sold 3% of the entire issued share capital of and shareholders loans held in CGR, a subsidiary of Crown, to KBH and 57% of the entire issued share capital of and shareholders loans held in CGR to IDC for a total amount of R105 million ($10 million). As part of this transaction, we loaned KBH R5.3 million ($0.5 million) to fund its initial purchase of 3% interest in CGR. According to the terms of the shareholders agreement entered into between these parties, the parties agreed that the 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 option was exercised by KBH in July 2002 and KBH is currently the owner of 60% of the entire issued share capital of and shareholders loans held in CGR. Crown now holds 40% of the issued share capital of CGR, which had three wholly-owned subsidiaries, Crown Mines Limited, City Deep Limited and Consolidated Main Reef Mines and Estate Limited.

        On October 10, 2002, CGR entered into an agreement to purchase the entire issued share capital and all shareholders' claims of ERPM. ERPM is located near the town of Boksburg on the East Rand, which is east of Johannesburg and approximately 100km from the Blyvoor Section. The purchase price of this acquisition is R100 million ($9.5 million).

        In connection with CGR's acquisition of ERPM, we entered into a loan and pledge agreement during October 2002. Under this agreement we agreed to lend and advance ERPM a working capital facility of R10 million ($0.9 million). The loan bears interest at the prime rate of The Standard Bank

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of South Africa on overdraft. As of November 30, 2002 the interest rate on the loan stood at 17%. The largest amount outstanding on the loan to date is R10 million ($0.9 million). CGR's acquisition of ERPM has been approved by the South African competition authorities.

        In October 2002 we loaned CGR the sum of R60 million ($5.7 million) to facilitate its acquisition of ERPM. This loan bears interest at the rate of 18.4% per year and is secured by a notarial bond over all the assets of CGR. We have subsequently loaned CGR an additional R6 million on these same terms. CGR in turn loaned this amount to ERPM as working capital.

Crown Section

        The Crown Section is situated just outside of Johannesburg, South Africa. Crown has mining rights to 5,787 acres and has the right to occupy 1,490 acres of freehold property. Crown's three operating plants re-treat the sand dumps, slimes dumps and other gold-bearing material such as valley silts, gold plant foundations and railway ballast, collectively termed "archive material," deposited as tailings from the now defunct mines that once operated in the Witwatersrand area of South Africa.

        Crown now operates the Crown, City Deep, Knights and West Wits gold plants, mining sand and tailings dams that were deposited in years when the technology for gold extraction was not as advanced as today. These dams are reclaimed by loading and trucking or by monitoring with a water jet and pumping the sand and tailings to the metallurgical plants. Low-grade rock dump material that was formerly regarded as waste is also loaded and trucked to the plants. Archive material is also a significant contributor of gold.

        In recent years, Crown has conducted extensive testing and financial modeling of a process called "pre-concentration." This process enables the metallurgical plant feed to be concentrated into streams that contain more gold ounces per ton, while minimizing other materials. The process is measured by the tons rehabilitated and the tons treated. The laboratory scale and pilot plant testing attempts to define the optimal process for each sand dump.

        The aim of this technology, if successfully implemented, is to upgrade 70% of the gold in the sand dumps into 30% of the mass. As roughly 70% of the costs in extracting gold in a re-treatment process are variable direct plant costs, this reduction in tonnage could result in substantial cost savings. The overall amount of gold recovered per ton is less, but it is recovered at a substantially reduced per unit cost. All other conditions remaining unchanged, this is expected to result in higher profits and greater opportunities to treat lower grade material.

        The following table details the operating and production results from the Crown Section for the past three fiscal years:

(1)

  Cash profit represents the difference between Revenues and Cash cost.

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        The Crown Section gold production for the 2002 fiscal year was 138,665 as compared to 145,029 ounces for fiscal 2001 and 140,916 for fiscal 2000. We were able to reduce cash costs to $204 per ounce of gold in fiscal 2002 from $214 per ounce in fiscal 2001 and $251 per ounce in fiscal 2000 due to the weakening of the Rand against the Dollar and cost control measures instituted by management. Based upon an assumed gold price of $320 per ounce and an assumed exchange rate of R10 to $1, at June 30, 2002 proven and probable reserves of the Crown Section were 1,340,000 ounces and we estimate that the life of the Crown Section extends up to 2010.

        Mining operations at ERPM are comprised of three vertical shafts know as Far East Vertical Shaft, Central Shaft and Hercules Shaft. There are also two additional shafts at ERPM. The first shaft is known as South East Vertical Shaft and is used for the transport of men and materials as well as the hoisting of rock. The second shaft is known as South West Vertical Shaft and is used for pumping.

        At the Far East Vertical Shaft, the Composite Reef is mined. This reef accounts for all the gold in the eastern portion of the mine. A high-grade concentration of gold, or payshoot, of the Composite Reef occurs in an arc which decreases in gold value from the northwest to the southeast. This high-grade payshoot is the result of sedimentological erosion and the reworking of the older Main Reef and Main Reef Leader gold-bearing pebble horizons with the gold being concentrated within the younger Composite Reef.

        Also at the Far East vertical shaft, there is a significant dyke development that trends roughly north-south and is exposed in the western faces. Faults in this area generally have small throws and are easily negotiated. Routine cover drilling is in place and several 200m long holes have been drilled towards the east to locate a fault that appears to be seismically active. The 200m long holes indicate that future production will not be impacted by this fault for the next two years. In order to obtain advance warning about the position of these faults, proposals for 400m holes have been budgeted.

•

West Witwatersrand Gold Mines Ltd

        West Witwatersrand Gold Mines Ltd, or West Wits was incorporated and registered as a public company in South Africa on December 21, 1967 under the name Minador Gold Mining Company Ltd.

        We acquired the entire share capital of West Witwatersrand Gold Holdings Limited, which was the parent company of West Wits, as well as Consolidated Mining Corporation Ltd's loan to West Witwatersrand Gold Holdings Limited, on April 1, 1996. We also acquired the entire issued capital and the shareholders' claim and loan account of East Champ d'Or Gold Mine Ltd, a gold mining company with mining title in the West Rand.

West Wits Section

        The West Wits Section was formed out of the northern section of Randfontein Estates located in the West Rand Gold Fields, about 22 miles west of Johannesburg, Gauteng Province. West Wits also has rights to mine on three adjacent mining leases, namely, East Champ d'Or, West Rand Consolidated and Luipaardsvlei. West Wits has mining title to 8,364 acres and owns 72 acres of freehold property on which all of its mining operations are situated. These include its processing plant, workshop and administrative buildings that have been upgraded during the last two years.

        The West Wits Section is situated on the northern edge of the Witwatersrand Basin near the town of Krugersdorp to the west of Johannesburg. We have ceased all underground and open-pit mining operations at West Wits and the present mining operation is an agglomeration of old mines on the Randfontein Basin separated from the main part of the Witwatersrand Basin by a geological structure known as the Witpoortjie Horst. Because of increased mining costs and a decline in the gold grade at these operations, all mining there has ceased as of August 2000. Over fifteen different gold-bearing pebble horizons have been mined. Ore has been mined from outcrops at the surface down to a

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maximum depth of 5,900 feet. Depth, infrastructure and higher pay limits prevented the complete exploitation of the reefs during the first phase of mining.

        West Wits mined the Livingston Reef package, locally known as the East Reef. It comprises a 100-foot thick package of conglomerates and quartzites dipping at an average of 18 degrees. The combined West Wits Section has produced more than one million ounces of gold since inception, before the cessation of underground and open-cast operations at the end of August 2000. Subsequent to the cessation of mining operations, the metallurgical plant at the West Wits Section was taken over by Crown for the processing of sand dumps only.

        The following table details the operating and production results from the West Wits Section for the past three fiscal years:

(1)

Cash profit/(loss) represents the difference between Revenues and Cash cost.

        The West Wits Section gold production for the 2002 fiscal year was 23,245 as compared to 25,849 ounces for fiscal 2001 and 81,276 ounces for fiscal 2000. We were able to reduce cash costs to $264 per ounce of gold in fiscal 2002 from $314 per ounce of gold in fiscal 2001 and $316 per ounce of gold in fiscal 2000 primarily due to the weakening of the Rand against the Dollar.

        In June 2002, we entered into an agreement with BTL for the sale of the West Wits gold plant, freehold areas, surface rights permits and certain related assets for R25 million ($2.4 million) to process previously reclaimed sand dumps and surface materials located at the West Wits Section. The purchase price is to be paid in installments from September 30, 2002. As part of the agreement, we agreed to indemnify BTL against any loss, damage or expense which BTL might incur as a result of any liability in connection with the transferred assets, the cause of which arose prior to this sale. The sale is still pending as a number of conditions precedent are still outstanding. We are re-negotiating the agreement with BTL to amend the payment terms of the purchase price.

        Also as part of our agreement with BTL, we agreed to abandon our rights to a certain portion of one of our surface right permits located at the West Wits Section. We also agreed to allow BTL the use of pipelines in respect of three other surface right permits and transfer two other surface right permits to BTL. Upon complete payment of the purchase price, we also agreed to transfer a portion of our freehold acres at the West Wits Section to BTL.

        However, the surface materials purchased by BTL do not include any materials which we have excavated from the open pit mine at the West Wits Section and deposited on the pit side or rock dump located in the freehold acres sold to BTL over which we have granted rights to a third party. Furthermore, we retain the right to mine underground by virtue of our mining titles and authorizations covering the property sold to BTL. We also retain certain rehabilitation liabilities with respect to our underground activities.

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Papua New Guinea

•

Dome Resources (Pty) Ltd

        Dome was incorporated on May 17, 1984 under the name Dome Resources NL. Dome's shares were listed on the precursor to the Australian Stock Exchange Limited in 1996. During September 1999, we purchased 28,693,002 (19.93%) Dome ordinary shares for A$0.30 per share. Dome owns and operates the Tolukuma gold and silver mine in Papua New Guinea.

        On March 13, 2000, we made an unconditional offer to the shareholders of Dome to acquire all the shares in Dome which we did not already own. We completed this acquisition in June 2001.

Tolukuma Section

        The Tolukuma Section is worked on a "fly-in-fly-out basis", with all staff being accommodated in single quarters. Open pit and underground mining is conducted using mining plant and equipment owned by Dome. Access underground is via declines. A mechanised cut and fill, or "avoca", mining method is used. Ore is hauled to the metallurgical plant which is about 600 yards from the mine then milled and treated through a conventional CIL circuit. The plant has an 18,000 tpm design capacity. The mine is located about 100 miles north of Port Moresby in Papua New Guinea at an elevation of 1,550 feet.

        The property was purchased by Dome from Newmont Second Capital Corporation in 1993. Production from an open pit commenced in 1995 and from underground since mid-1997. The mine is a small (18,000 tpm capacity), high-grade (0.57 oz/t) operation. In fiscal 2002, the mine produced 71,955 ounces of gold and 261,550 ounces of silver. Total cash costs were $221 per ounce of gold equivalent (gold and silver by revenue) for fiscal 2002. Dome has consolidated an extensive holding (3,662 square miles) of exploration licenses around Tolukuma.

        The Tolukuma Section consists of one mining lease, ML 104, three exploration licenses, EL's 580, 683 and 894 which surround the mining lease, three other exploration licenses, EL's 1171, 1262 and 1264 which abut and surround the three other EL's and five other areas held under application for exploration licenses, ELA's 1263, 1271, 1281, 1284 and 1263. Dome has an unencumbered 100% interest in all these tenements. In total, these exploration licenses and applications for exploration licenses cover an area of approximately 2,500 acres. The annual exploration expenditure required to keep the exploration tenements in good standing is approximately A$1 million.

        The Tolukuma deposit is an epithermal low sulphidation gold/silver/quartz vein system notable for its high-grade "bonanza" style mineralization. The Tolukuma deposit, as currently exploited, is essentially a single narrow epithermal vein system that follows a series of linked structures trending generally south easterly from Tolukuma Hill. Quartz veins average three to six feet in width over a strike length in excess of 0.6 of a mile. All of the present gold resource is located within these veins, in four sections that have different geological characteristics. From north to south these sections are Gifunis, Tolukuma, Tolimi and Gulbadi, containing 2%, 5%, 37% and 56% of the total gold resource, respectively. The distribution of the silver resource is very similar, being 1%, 7%, 37% and 55%, respectively. A clay zone of variable width is located in the Gulbadi section. Minor loops off the main vein, minor splay veins and minor cross veins are excluded from the resources, although they are mined at times. Most of the production is now from underground.

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        The following table details the operating and production results from the Tolukuma Section for the past three fiscal years.

        The Tolukuma Section gold production for the 2002 fiscal year was 71,955 ounces as compared to 63,593 ounces for fiscal 2001 and 17,811 ounces for fiscal 2000. The Tolukuma Section also produced 261,550 ounces of silver in fiscal 2002. We were able to reduce cash costs to $240 per ounce of gold in fiscal 2002 from $242 per ounce of gold in fiscal 2001 and $214 per ounce of gold in fiscal 2000 primarily due to production efficiencies related to the increase in ounces produced. Tolukuma was purchased in April 2000 and thus the production of 17,811 ounces of gold in fiscal 2000 reflects only a period of three months. Based on an assumed gold price of $320 per ounce and an assumed exchange rate of R10 to $1, at June 30, 2002 proven and probable reserves of the Tolokuma Section were 78,000 ounces and we estimate the life of mine of the Tolokuma Section extends up to 2005.

Exploration Projects

•

South Africa

        The Argonaut Project represents the southern down-dip extension of the Central Rand gold field. The strike length of the area covered by the mineral rights covers approximately 19 miles from Durban Deep in the west to ERPM in the east and reaches a depth of more than 13,000 feet.

        The Argonaut Project was suspended in August 1999 due to the prevailing low price of gold. At present, we have completed a three-dimensional seismic survey and a comprehensive mineral and surface rights search. The feasibility of the Argonaut Project is being re-evaluated by us due to the recent increase in the Rand price of gold.

        Further exploration work on the Argonaut Project is necessary over the next several years to accurately delineate the underground gold reserves which lie between three thousand and five thousand meters below the surface. Only after this exploration work is complete will we be able to commence sinking shafts.

        The work involves an initial three dimensional seismic survey from the surface over the entire proposed lease area of two hundred sixty square kilometers. The system uses sound waves that are transmitted into the ground by large vibrating machinery on the surface. The sound waves reflect off different layers of material underground. The reflected sound waves come back to the surface and are picked up by special microphones. The data is then relayed to a computer where it is used to draw diagrams of the underground area. The survey will take approximately two years to complete.

        Once the seismic survey results are known, this data is used to assist in positioning the exploration boreholes that are needed to sample and measure the amount of gold in the reefs. Approximately thirty-five boreholes will be drilled to evaluate gold deposits at the Argonaut Project. The drilling of

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the boreholes will start approximately one year after the three dimensional seismic survey has commenced and will continue for an additional two years. If the results of the three dimensional seismic survey and drilling are encouraging, a detailed feasibility study will be conducted. Once this is complete, the design of the gold mine and underground workings can commence. This will require an additional two years.

•

Papua New Guinea

        Results of the Saki prospect area, have yielded low grades to date with our best results to date being 6.6g/t over 1.0m and 5.5g/t over 3.25m. Drilling is continuing and we are targeting veins that are down the hill and deeper into the system in areas where surface sampling has shown increased grades.

        Drilling sites are also being prepared on the Taula vein at Seri Seri which is 4km south of the Tolukuma mine. Grass roots exploration has been concentrated on uranium and thorium responses developed from reprocessing of the airborne programme of 1998. This is being done to test the concept of radiometric signatures potentially identifying mineralization compared to the potassium data highlighting the alteration. Eleven targets have been identified (all within 10km of Tolukuma), and the first of these has revealed an extension of the Tolukuma Structure, however, as yet no significant gold mineralization has been located.

        A new road is being extended south from the Gulbadi pit into the Illive Valley for the drilling of deep holes into the Milaihamba Structure, which is a future mining area. This road is now being mapped and sampled to identify structures and mineralization interpreted from the opposite side of the valley. Approximately 24km of line has been cleared for surveyors to mark out the boundaries of a new mining lease application that will include the prospects of Saki and Taula veins.

        In the regional programs aimed at longer-term targets, reconnaissance work has been carried out at the Awara and Gira prospects, which are exploration areas, and has confirmed the work of earlier exploration companies with delineation of anomalous gold and gold—base metals mineralization. A brief reconnaissance of pits being worked by members of the local community showed significant gold in samples from a vertical shear zone with quartz—pyrite stockwork. The planned airborne geophysical survey covering the area will commence shortly.

•

Australia—Daylesford

        Our license in Daylesford, which is a prospecting area in Victoria, Australia, was renewed for a period of one year expiring on May 2003. Progress to date includes data acquisition and interpretation. Previous drilling by Range River Gold NL, does not appear to effectively test a structurally favorable zone below the Ajax workings, which is a mining area, since the area has not been tested by drilling beyond relatively shallow depths. Testing of drill samples indicates 85% of gold is located at a depth of less than 105m. The quartz reef mineralization appears to have strike lengths of less than 150m with widths of one to five meters and multiple reefs were exploited representing structural repetition at depth.

Closed Operation

•

Durban Deep Section

        The Durban Deep Section is situated 15 miles west of Johannesburg. We have title to substantial land tracts on the outskirts of the City of Roodepoort, which is located in this section.

        The Durban Deep Section contains mining title to 14,262 acres and owns 3,667 acres of freehold property on which substantially all of its mining operations are situated. These include its administrative buildings, hospital, recreation complexes, housing in both hostel and free-standing houses and a security complex.

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        The Durban Deep Section is situated on the northern edge of the Witwatersrand Basin immediately to the west of Johannesburg. Mining had been taking place within the lease area since the discovery of the Witwatersrand gold field in 1886 at nearby Langlaagte. Five different ore bodies have been mined. Ore has been mined from outcrops at the surface down to a maximum depth of 9,200 feet and the reefs are known to persist to 13,000 feet below the surface within the lease area. Depth, infrastructure and higher pay limits prevented the complete exploitation of the reefs during the first phase of mining.

        Following the withdrawal of our underground pumping subsidy, the deeper sections of the mine are flooded. In addition, as of August 2000, we ceased all underground and open pit mining operations at the Durban Deep Section. On a combined basis, the Durban Deep Section produced more than 37 million ounces of gold prior to the cessation of operations.

Management Service Agreements

        We provide management services for CGR and ERPM under management service agreements entered into with each of them. These services include: financial management, gold administration and hedging, technical and engineering services, mineral resource services and other management related services.

        For CGR we provide management services jointly with KBH. The management services at ERPM are provided exclusively by us. Our management fee for services performed at CGR is R0.7 million ($0.07 million) per month and our management fee for services performed at ERPM is approximately R1.5 million ($0.1 million) per month. The agreement with CGR is for one year and is renewable annually by agreement. The agreement with ERPM is for a fixed two year period with an option to renew.

Environmental Management Performance Assessment

        In order to assess the adequacy of approved environmental management programs in place at all our operations, and to strive for continual improvement and excellence in corporate governance, environmental audits are carried out at all of our operations. The audits are conducted at the North West Operations, Blyvoor Section, Crown Section and the Durban Deep Section closure operations. A detailed environmental audit was carried out at the Tolukuma Section during August 2002 and a plan of action drafted and initiated to address minor regulatory related non-conformances and to address pending environmental legislation. A follow-up audit is scheduled for June 2003.

        Comprehensive and detailed audit reports, are prepared. After discussion with the relevant management structures, and through a process of risk prioritization all non conformances are prioritized and actioned in a formally structured action plan for each operation. The action plans identify the key activities that need to be addressed to demonstrate sound environmental performance, the drivers responsible for actioning these, as well as practically achievable, yet definitive timescales for completion.

        Progress is measured by means of regular report back at monthly business review meetings and compliance audits aimed at swiftly addressing non compliance or identifying and addressing "progress inhibitors".

        This structured internal audit process is now being further applied to serve as basis for the Environmental Management Program, or EMP, performance assessment and monitoring reports, compliant with Regulations 5.17 and 5.18 of the Minerals Act, which we have scheduled to submit to the Department of Minerals and Energy, or the Department, in February 2003.

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Environmental Regulation in South Africa

        Mining companies in South Africa are required by law to submit Environmental Management Programs, or EMPs, with respect to each mine to the Director: Mineral Development. No mining may commence without an approved EMP unless a temporary mining authorization has been granted. These reports identify the individual mine surface rehabilitation issues and must be approved by other South African government departments, which are charged with the administration of the laws relating to the environment, including the Department of Water Affairs and Forestry. The EMP will only be approved once the various government departments which hold an interest under different laws in the protection of the environment have been consulted. The EMP must contain particulars of the ability of the holder of the prospecting permit or mining authorization to make the necessary financial provisions to implement the rehabilitation measures provided for in the EMP. Once approved, the EMP becomes legally binding on the holder of the relevant permit or authorization. The requirements imposed upon mining companies to ensure environmental restitution are currently under review and it is possible that the adoption of additional or more comprehensive and stringent requirements, in particular with regard to the management of hazardous wastes, the pollution of surface and ground water systems and the duty to rehabilitate closed mines will result in additional costs and liabilities to us.

Environmental Issues in South Africa

        Because of the diverse nature of our operations, ranging from underground mining to surface reclamation activities, environmental risks vary from site to site. These risks have been addressed in EMPs which have been submitted to the Department and which are reviewed and updated on an annual basis. EMP's have been submitted for all operations and all have been approved by the Department. Additionally, the key environmental issues have been prioritized and are being addressed through active management input and support and progress measured in terms of activity schedules and timescales determined for each activity.

Radiation

        There is a risk of radiation exposure inherent in mining operations due to the possible presence of gamma- and beta-emitting radio-nuclides in processed sludge and slimes and in water contained in tailings dams, exposure to uranium and other radio-active elements during the mining process and the potential exposure to radon and its isotopes (bismuth, lead and polonium). We believe our South African operations are currently in compliance with the requirements of the National Nuclear Regulator. Monitoring and control programs commensurate with the radiation hazards identified during risk assessments are in place to ensure that all radiation hazards to the environment are addressed and mitigated.

Waste Management

        A study to identify and quantify all categories of waste, including potential radioactive waste, has been completed. Potential re-use through recycling, implementation of a waste reduction strategy and alternative disposal options for tailings are all being considered. Specific recommendations with regard to the backfilling of voids and shafts with slimes material have been made to the Department of Water Affairs & Forestry.

North West Operations

        Activities in these sections include underground mining and the reclamation of surface dump material. Prospecting aimed at examining the viability of open-pit mining in the Townlands area and the mining of a number of residue deposits is currently underway. Due to its proximity to the Vaal River and the potential of pollution from seepage and run-off of water, a program has been initiated to

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increase the water retention capacity of the paddocks at the Buffelsfontein Tailings Complex and return water dams and to install a "draw off" system which will allow for return water to be re-circulated to the multigold plant, thus minimizing potential water pollution and utilizing polluted water more fully. A program has also been initiated to progressively vegetate the Buffelsfontein tailings dam slopes, aiming at self-sustainability within the next six years. A similar program is already well advanced at the Hartebeestfontein complex. Additionally, a comprehensive water balance program is currently being prepared and is scheduled for completion by the end of December 2002. We believe this water balance model will, when completed and implemented, benefit the whole area, as it is anticipated that it will reduce dependence on the Midvaal potable water reticulation system. This will reduce pressure on this scarce national resource in the North West Province.

        Pollution from the slimes dams is controlled by a return water dam system which facilitates the water re-use via the three metallurgical plants at this section. Dust pollution is mitigated through an active vegetation program and selective ridge plowing in areas marked for rehabilitation.

        The vegetation program for the tailings dams is preceded by a detailed scientific and site-specific evaluation of the tailings complex. Based on the results of geo-chemical analyses performed, the tailings medium is prepared for vegetation establishment by the addition of lime to neutralize the natural acidic conditions and fertilizer. Vegetation is then established and care is taken to select species endemic to the area. A variety of species selected are then planted to ensure species diversity using either the leaching (irrigation) or dryland method. Regular monitoring is conducted.

        To address dust pollution in unvegetated areas, in the short term, the open surface areas on top of the tailings dam are ridge ploughed mechanically. This method significantly reduces dust re-suspension. As an additional measure in inaccessible areas, environmentally friendly chemical and organic dust suppressants are deployed.

Blyvoor Section

        Due to the surrounding dolomitic geology and hydro-geology, water management and the prevention and remediation of sinkholes and subsidences are important issues at this section. The impact that dewatering of the compartments has had on the dolomites due to pumping activities of mines in the area, as well as the anticipated impact of re-watering of the compartments, when mining operations eventually cease, needs to be fully understood and quantified. Blyvoor is represented on the Far West Rand Dolomitic Water Association and has actively supported initiatives aimed at getting a better understanding of these complex issues. Blyvoor continues to support the current study undertaken under the auspices of the Water Research Commission to determine the best practical environmental approach to the filling of sinkholes. The study is expected to be completed by June 2003. Additionally, Blyvoor has also provided input and is currently supporting a regional initiative aimed at providing an integrated water management strategy in the Carletonville area. Pollution from slime dams is controlled by dust suppression and water management programs. Short-term dust control is accomplished through ridge ploughing the top surface of dormant tailings dams. Additionally, environmentally friendly dust suppressants, such as molasses, are applied. Dust fall-out is also monitored. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation of the tailings complexes followed by the application of lime, to neutralize the natural acidic conditions, and fertilizer.

Crown Section

        The Crown Section operates at sites located in close proximity to significant infrastructure and commercial and residential development. The major environmental risks remain associated with dust from various recovery sites, and effective management of relocated process material on certain tailings dams. The impact of windblown dust on the surrounding environment and community, is addressed

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through a scientific monitoring and evaluation process, with active input from the University of Witwatersrand and appropriate community involvement. Environmental management programs, addressing all environmental issues, are prepared by specialist environmental consultants and applied site specifically to each recovery site and integrated into the audit process. Although we have completed a project for thickening re-processed tailings at this section, there remains a risk of localized sloughing which can result in that section of the dam being closed temporarily, with repair work being done to the dam wall. Also, direct rainfall on polluted reclamation sites in this section prior to their final clean up may create windblown dust and polluted water which may create future environmental liabilities for us. Water pollution is controlled by means of a comprehensive system of return water dams which allow for used water to be recycled for use in our metallurgical plant. Dust pollution is controlled through an active environmental management program for the residue disposal sites and chemical and organic dust suppression on recovery sites. Short-term dust control is accomplished through ridge ploughing the top surface of dormant tailings dams. Additionally, environmentally friendly dust suppressants, such as molasses, are applied. Dust fall-out is also monitored. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation of the tailings complexes followed by the application of lime, to reduce the natural acidic conditions, and fertilizer.

        A program of environmental restoration that provides for the rehabilitation of areas affected by mining operations during the life of the mine is in place.

Durban Deep Section and West Wits Section

        Underground mining at the Durban Deep Section and at the West Wits Section has ceased as of August 2000. Commensurate with the decision to close these operations, a detailed closure program was prepared and submitted to the office of the Department in December 2000. The drafting of the program was preceded by a comprehensive risk assessment process, during which both residual and latent environmental risks and impacts were identified and prioritized. The risks identified are currently being addressed in accordance with the closure program submitted. In order to mitigate the impact of fugitive windblown dust from dormant tailings dams in proximity to surrounding communities, short term dust suppression methods are currently being deployed. Although this is expected to continue for a further two years, the program is being run along with a vegetation program, currently focusing on the two main tailings impoundments in question, namely the main mine complex, commonly referred to as 2124, and the West Rand Cons complex.

        During the year, and as part of the rehabilitation program, a total of 17,000 trees were planted on the complex and key surface areas rehabilitated and grassed. Preliminary indications are that the tree species have established well. Attention will be focused in the coming year on the flattening, amelioration and vegetation of the tailings dams side slopes.

        In addition to dust suppression, amelioration and vegetation of the tailings dams, the closure program is also currently focussing on the sealing of shafts and openings to surface, the demolition and rehabilitation of shaft infrastructure and the rehabilitation of open surface areas.

        During fiscal 2002, a total of nine shafts on the surface area were permanently sealed and capped according to plans and procedures approved by the Department. A further six shafts are planned to be capped by December 2002 in accordance with the closure program risk prioritization phasing schedule.

        In addition to the capping and sealing of shafts, during the fiscal year 2002 surface rehabilitation was carried out at a total of six shaft areas. At the No. 1 and No. 7 shafts complexes rehabilitation was completed while at Nos. 5, 6 and 8 shafts, rehabilitation of the surface area is currently underway and is expected to extend to March 2003.

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        As the closure program makes provision for active community participation and involvement, rehabilitation activities have been planned in such a way as to facilitate community participation and support. Community participation is encouraged and the concerns of interested and affected parties are addressed as they arise at public participation meetings facilitated by a respected and renowned facilitator.

Financial Provision for Rehabilitation

        A Board of Trustees manages the individual Environmental Trust Funds of our mines. Regular meetings are held and a quarterly report is submitted to our board of directors. The total rehabilitation liability at June 30, 2002 was calculated at $17.9 million (2001: $22.6 million). Amounts have been irrevocably contributed to trusts under our control. The money in the trust funds are invested primarily in interest bearing debt securities. We intend to finance the ultimate rehabilitation costs from the money invested in the trust funds as well as, at the time of mine closure, with the proceeds from the sale of the remaining assets and gold from plant cleanup. At June 30, 2002, cash of $12.1 million (2001: $13.8 million) was vested within the various trust funds. Rehabilitation costs included in operating expenditures at all of our South African mining operations amounted to approximately $0.4 million for the fiscal year.

        As of June 30, 2002, the balances for the rehabilitation trust funds were $0.5 million (2001: $0.6 million) for Crown Section, $0.7 million (2001: $0.5 million) for West Wits Section, $8.8 million (2001: $10.8 million) for Buffels Section, $1.3 million (2001: $1.5 million) for Blyvoor Section and $0.8 million (2001: $0.4 million) for the Durban Deep Section. The fund for each section includes provisions for all mines within that section. The fund for the Buffels Section includes provision for the Harties Section and provisions for the West Wits Section and Durban Deep Section are maintained in the same fund.

        Subject to Department of Minerals and Energy and South African Revenue Services approvals, ERPM will contribute to the trust fund for the Crown Section. ERPM's rehabilitation liability of R38 million ($3.6 million) is currently unfunded and it has been proposed by us that an initial payment of R5 million ($0.5 million) be provided by CGR to the fund. Shortfalls in these funds will be financed from ongoing financial contributions and to this end, a schedule phasing contributions into the fund over the life of the mine for the various operations has been prepared. The quantum will be dependent upon affordability at each site and if the operations cease prior to the projected life of mine, the rehabilitation funds may be insufficient to meet all the rehabilitation obligations of that particular operation.

        We may incur significant costs associated with complying with the requirements imposed under existing or new legislation and regulations. This may include the need to increase and accelerate expenditure on environmental rehabilitation, which could have a material adverse effect on our results and financial position. With the introduction of an environmental rights clause in South Africa's Constitution a number of environmental legislative reform processes have been initiated. Legislation passed as a result of these initiatives has tended to be materially more onerous than laws previously applied in South Africa. Examples of such legislation include the National Water Act, 1998 (as amended), and the National Environmental Management Act, 1998 (as amended), both of which include stringent "polluter pays" provisions. We believe that our current provisions for compliance with such legislation is reasonable, however, we cannot assure you that future changes and development in environmental regulation, if any, will not adversely affect our operations.

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Environmental Regulations in Papua New Guinea

Current Environmental Legislation

        The following environmental legislation is currently applicable to the Tolukuma Section:

•

The Water Resources Act;



•

The Environmental Planning Act; and



•

The Environment Contamination Act.

        The Water Resources Act regulates and controls the use of all Papua New Guinea water resources and addresses the following issues:

•

water use;



•

waste discharge quantities and quality;



•

water quality monitoring; and



•

optimal utilization and recycling.

        The Environmental Planning Act and the Environment Contamination Act stipulate the regulatory requirements, as well as the process required for the development of a mining lease and special mining lease, and include the following:

•

accurately defining pre-mining conditions;



•

assessing environmental impacts;



•

enforcing good environmental practice; and



•

evaluating environmental performance.

The PNG Environmental Act 2000 and Regulations 2000

        It is intended that the PNG Environmental Act 2000 and Regulations 2000, or the Environmental Act and Regulations, will replace the existing environmental legislation. The Environmental Act and Regulations provide for draft environmental policies to be drawn up specifying whether or not an environmental permit can be issued. For activities deemed to have a minor impact on the environment, such as, small scale alluvial mining, environmental permits will not be required. However, mechanized mining will be subject to the permit system. The policy may dictate that an environmental improvement plan be prepared by the permit holder. This plan would set out the steps by which a proposed activity will be carried out in order to comply with an environmental policy or any standard or requirement imposed by the Environmental Act and Regulations.

        Environmental permits will be required for what are classified in the regulations as Level 2 or Level 3 activities. Level 2 and Level 3 activities are defined in the Environmental Act and Regulations in the context of gold mining, Level 2 activities are classified as either Category A or Category B activities whereas Level 3 activities resort under one category only.

        Level 2 Category A activities are:

•

drilling programs where the aggregate depth of all holds drilled is greater than 2,500 meters; and



•

mechanized mining on a mining lease issued under the Mining Act involving non-chemical processing of no greater than 50,000 tonnes per annum.

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        Level 2 Category B activities are:

•

mechanized mining of a mining lease issued under the Mining Act involving chemical processing of no greater than 50,000 tonnes per annum;



•

mechanized mining on a mining lease issued under the Mining Act involving non-chemical processing of more than 50,000 tonnes per annum; and



•

mineral beneficiation or processing other than alluvial mining in accordance with an alluvial mining lease issued under the Mining Act.

        Level 3 activities are:

•

activities involving investment of a capital cost of more than 50 million Kina, except where such investment is made in pursuing an activity otherwise dealt with in the regulations in which case that category of activity will apply to the investment;



•

activities that will involve the discharge, emission or deposit of hazardous contaminants, except where such discharge, emission or deposit is ancillary or incidental to, or associated with, any other activity in the regulations in which case that category of activity will apply to the discharge, emission or deposit;



•

activities that may result in a significant risk of serious or material environmental harm within Wildlife Management Areas, Conservation Areas, National Parks and Protected Areas or any area declared to be protected under the provisions of an international treaty to which Papua New Guinea is a party and which has been ratified by the Parliament of the Independent State of Papua New Guinea; and



•

mining activities which require the issue of a special mining lease under the Mining Act; mechanized mining of a mining lease involving chemical processing, except where the activity falls within the ambit of a Category B, Level 2 activity.

        Our mining operations at the Tolukuma Section are classified as Level 3 activities. However, environmental permits will not be required for existing Level 2 or Level 3 activities unless the Director, by notice, requires existing Level 2 or Level 3 activities to apply for such a permit. We do not believe that these conditions will be applicable to our existing mining lease at the Tolukuma Section. However, we do believe that the following will be required for the new mining lease under negotiation:

•

the Tolukuma extension, which is a mining area, will be considered a Level 3 activity;



•

environmental policies will be binding and may dictate that we prepare an environmental improvement plan; and



•

an environmental permit will be issued upon application and satisfaction of requirements.

        An environmental impact assessment, or EIA, is conducted by an independent party to assess the potential impacts of an activity on the environment. The EIA provides for a "no-go option" should the environmental and social impacts exceed the economic advantages of the proposed activity.

        The exact format of the permits has not been finalized. However, the permit will likely include detailed requirements as to:

•

water quality parameters;



•

water use;



•

water discharge;



•

tailings disposal;

49

•

environmental fees;



•

monitoring programs;



•

emergency response plans; and



•

rehabilitation and closure objectives.

Environmental Code of Practice for the Mining Industry in Papua New Guinea—November 1999

        The Environmental Act and Regulations provide for the issuance of environmental codes of practice which state ways of achieving compliance with general environmental duties. Compliance with these codes of practice is voluntary unless compliance is made part of the conditions of an environmental permit.

        The Environmental Code of Practice for the Mining Industry in Papua New Guinea -November 1999 makes several recommendations including:

•

implementing environmental management systems at operations;



•

effecting rehabilitation progressively rather than at the end of the life of mine;



•

treating tailings slurry prior to discharge into the environment and consider discharge only as a last resort;



•

reducing the volume of mine water usage and reduce groundwater seepage;



•

formulating and implementing a decommissioning and rehabilitation policy; and



•

conducting regular monitoring in accordance with an environmental mine monitoring program during operation and after closure.

        An environmental plan was submitted to the Directorate Environment and Conservation, or DEC, in November 1993 and was approved, subject to certain conditions, on May 24, 1994. The three principal conditions were:

•

submission of an environmental management and monitoring program;



•

rehabilitation on a progressive basis throughout the life of mine and progress reports every six months; and



•

develop a final site rehabilitation plan and submit the plan for years from the date of final plant commissioning.

        We submitted our environmental management and monitoring program in July 1994 and have adhered to its requirements. A final site rehabilitation plan has not yet been prepared. We anticipate that this plan will be completed and submitted to the DEC by July 2003.

Environmental Issues in Papua New Guinea

        The Tolukuma Section has been developed in accordance with an environmental plan approved by the Papua New Guinea authorities in July 1994. We believe the project materially complies with all environmental requirements. The discharge into rivers of tailings and waste material produced from treatment of this ore containing high mercury values are being addressed by reducing the amount of mercury containing material being fed into the gold plant. Additionally a comprehensive monitoring program has been undertaken in accordance with an approved Environmental Management and Monitoring Program which addresses water quality, population dietary survey and aquatic fauna and metals in tissue surveys. A final site rehabilitation plan has not yet been prepared. We anticipate that this plan will be completed and submitted to the DEC by July 2003.

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        With the exception of the requirement that a mine should "effect rehabilitation progressively rather than at the end of life of mine", the Tolukuma Section is currently in substantial compliance with industry code of practice. Concurrent rehabilitation of "mined-out" areas ceased in 2000. This was identified and is addressed in our Environmental Audit Report of August 2002. In accordance with this report, a systematic rehabilitation and vegetation program will be integrated into the decommissioning and closure program. This program is currently being drafted and will be completed for implementation by June 2003. The impact of the cessation of rehabilitation, and in particular vegetation, has not been significant. Due to the high rainfall in the area, abundant surrounding vegetation and species diversity is very evident. However, this process will be enhanced further through active vegetation and monitoring and maintenance to ensure sustainability.

        Additionally, the report also identified other environmental issues requiring attention and including:

•

detailed plant and process water balance;



•

water management strategy;



•

good housekeeping;



•

dietary surveys and aquatic fauna and metals and tissue surveys; and



•

a decommissioning plan.

        All of these issues have been prioritized and actions addressing them are scheduled for completion by June 2003.

Title to Properties

South Africa

        We hold registered title to either statutory mining rights or mineral rights recognized in South Africa which entitles us to apply for a prospecting and/or mining authorization. We also hold valid and enforceable prospecting and mining authorizations sufficient to permit our current prospecting and mining authorizations. Because we are either the owner of the land or the holder of a Surface Right permit which is a statutory right granted under repealed legislation to use the surface of the land for purposes ancillary or incidental to mining operations, we are entitled to enter the land and conduct these operations. These rights will be affected upon the enactment of the Mineral and Petroleum Resources Development Bill, or the Bill. The Blyvoor Section consists of one mining license, ML46/99 in respect of statutory mining rights and mineral rights held by Blyvoor. The Buffels Section consists of one mining license, ML4/2001 in respect of statutory mining rights, and one prospecting permit, RP54/2002 in respect of statutory mining rights and mineral rights held by Buffels. We are in the process of applying for a prospecting permit for the Argonaut Project. We have mining title to 72,003 acres and freehold title to 14,145 acres in South Africa. Under current legislation, our mining licenses in South Africa are granted for an indefinite period until the minerals have been exhausted.

        Neither we nor our subsidiaries own the entire surface in respect of our mining operations but where necessary we or one of our subsidiaries hold registered title to surface right permits. Surface right permits are not property but are statutory rights issued under repealed mining legislation to use an area of the surface of the land for a specific purpose incidental and ancillary to mining. Either as owner of the surface or as holder of the surface right permits we are entitled to enter the land and conduct our mining operations. The surface right permits are entrenched in the Bill.

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Papua New Guinea

        The Tolukuma Project consists of one mining lease, ML 104, three exploration licenses, EL's 580, 683 and 894 which surround the mining lease, three other exploration licenses, EL's 1171, 1262 and 1264 which abut and surround the three other EL's and five other areas held under application for exploration licenses, ELA's 1263, 1271, 1281, 1284 and 1263. Dome has an unencumbered 100% interest in all these tenements. In total, these EL's and ELA's cover an area of approximately 2,500 acres. We have mining lease to 1,898 acres in Papua New Guinea. The following table details the status of our mining license and exploration licenses.

(1)

EL1263 initially expired on November 2, 2002.

(2)

EL1284 initially expired on April 18, 2002.

(3)

EL1297 initially expired on August 30, 2002.