GOLD MINING - PERCEPTIONS AND MISCONCEPTIONS _RBS_

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					Equity | South Africa


                        6 December 2010                                                                                                    Produced by: Nedbank Capital




                                                                Gold Mining
                                                                Perceptions and misconceptions
                                                                Popular perceptions often present a doom-and-gloom scenario with little hope of
                                                                salvation for South African gold equities. While the sector's long-term
                                                                performance is not overly impressive, gold shares have shown impressive
                                                                returns when exposure is timely and restricted to the shorter term.

                                                                Key recommendations & forecasts

                                                                                                      Reuters     Year end   Recom      Price    Target    EPS      PE
                                                                                                                                                  price   1fcst   1fcst
                                                                AngloGold                              ANGJ J     Dec 2010    Hold    R336.99   R360.00   13.99   24.10
                                                                Gold Fields                             GFIF.J    Dec 2010     Sell   R120.99   R121.00    6.05   20.00
                                                                Harmony                                HARJ.J     Jun 2011    Hold     R80.00    R94.00    5.29   15.10
                                                                P.A Resources                          PANJ.J     Jun 2011     Buy      R1.09     R1.44    0.19    5.90
                                                                Great Basin Gold                       GBGJ.J     Dec 2010     Sell    R20.09    R22.00   -0.40     n/a
                                                                DRDGold                                DRDJ.J     Jun 2011    Hold      R3.42     R4.00    0.36    9.50
                                                                Source: Company data, Nedbank Capital forecasts




                                                                Raising our gold price forecast
                                                                Having been too cautious in our previous update (‘Every dog has its day’, published 20
                                                                September 2010) we raise our gold price forecasts to US$1,350/oz (previously US$1,200/oz)
                                                                for 2011 and US$1,250/oz (US$1,100/oz) for 2012. Our long-term forecast remains
                                                                US$900/oz (real). The impact of these increases on our valuations is partially neutralised by
                                                                our stronger rand forecast.

                                                                Perceptions are often misconceptions
                                                                We looked at some popular beliefs about South Africa’s gold sector, and found that while
                                                                most are true in the longer term, they often deter investors from acting on attractive shorter-
                                                                term opportunities. We also consider the infamous ‘gold premium’ overhyped as, according
                                                                to our calculations, gold equities trade at a discount to their NPV when valued at spot rates.
                                                                In addition, we believe the strong rand’s impact on sector profitability is often exaggerated as
                                                                near record high rand gold prices are yielding healthy margins. Furthermore, we note that the
                                                                rand often weakens when the price of gold drops, thereby protecting margins.

                                                                We still prefer a shorter-term trading strategy
                                                                Our analysis of these beliefs about the gold sector confirms our preference for a shorter-term
                                                                trading strategy. We believe that exposure is best selected based on relative performance
                                                                and the valuation of individual shares and the major and junior sectors.

                                                                Recommendation changes
                                                                We downgrade AngloGold Ashanti to Hold (previously Buy) and reduce our target price to
                                                                R360 (R388); we downgrade Gold Fields to Sell (Hold) and lower our target price to R121
                                                                (R130); we maintain Harmony as a Hold with a new target price of R94 (R95); Pan African
                        Analyst                                 Resources, still our top pick in the sector, remains a Buy with a higher target price of R1.44
                        Christian Siebert                       (R1.16); we downgrade Great Basin Gold to Sell (Hold) and maintain our target price of R22
                        South Africa
                                                                and DRDGold remains a Hold and we maintain our target price of R4.00. The risk profile of
                        +27 11 295 8212
                        Csiebert@Nedbankcapital.co.za           all our ratings is high.

                        7/F Corporate Place 135 Rivonia Road,
                        Johannesburg, South Africa

                        http://research.rbsm.com                Important disclosures can be found in the Disclosures Appendix.
                               Contents

                               Raising our gold price forecast                                                         3
                               Like a catchy but annoyingly repetitive tune, key catalysts for gold remain: QE and
                               related potential for the debasement of fiat currencies, deflationary pressures,
                               sovereign default risk, low interest rates, anaemic economic growth and
                               underperforming equity markets.
                                     US$ losing relevance                                                              3
                                     ETFs continue to increase accessibility of gold                                   5

                                     Changes to our forecasts                                                          5


                               Popular misconceptions                                                                  7
                               In this chapter we test the validity of some popular beliefs about the South African
                               gold sector. Often these perceptions are based on long-term trends that we believe
                               do not detract from shorter-term opportunities.
                                     Gold shares always underperform                                                   7
                                     Gold shares are a long-term investment                                            8

                                     The strong rand is accelerating the industry’s decline                            9
                                     South African mines are the highest cost producers                               10
                                     Gold shares trade at a premium to their NPV                                      11


                               Investment stance                                                                      13
                               While gold keeps testing new highs, equities remain range bound and give little
                               indication of reaching new highs. We see no near- to medium-term catalysts to
                               change this. For now we pin our hopes to juniors that can still create value through
                               growth from a lower base.
                                     Juniors continue to outperform                                                   13

                                     Valuation methodology                                                            13


                               Company profiles
                                     AngloGold Ashanti                                                                16

                                     DRDGold                                                                          22

                                     Gold Fields                                                                      27
                                     Great Basin Gold                                                                 32
                                     Harmony Gold                                                                     37
                                     Pan African Resources                                                            42




Gold Mining | Table of Contents | 6 December 2010                                                                          2
                               Raising our gold price forecast

                               Like a catchy but annoyingly repetitive tune, key catalysts for gold remain: QE and related
                               potential for the debasement of fiat currencies, deflationary pressures, sovereign default
                               risk, low interest rates, anaemic economic growth and underperforming equity markets.

                               In our last sector report (Every dog has its day, 20 September 2010) we forecast stronger gold
                               prices in the final quarter, but the rush to gold over the past few months has surpassed our
                               expectations.

                               In particular, inconsistent equity markets reacting to fleeting news flow – regarding issues ranging
                               from sovereign debt crises to bail-out packages – has led excess liquidity to flee to gold. In this
                               context, gold’s safe haven status is reflected in its low correlation to developed equity markets.

                               Chart 1 : R2 coefficient between gold and equity indices

                                                1.00




                                                                                                                                                                                                                   0.88
                                                                                                                                                                                            0 .87
                                                0.90




                                                                                                                                                                                                    0.7 9
                                                0.80




                                                                                                                                                                              0.67
                                                                                                                                                                       0.65
                                                0.70




                                                                                                                                                        0.5 3
                                                0.60
                                   RSQ factor




                                                0.50

                                                0.40




                                                                                                                                                                                                            0.27
                                                0.30
                                                                      0.20




                                                                                                                                                                                     0.18
                                                0.20
                                                                                    0.05




                                                                                                                   0.05
                                                                                                            0.05




                                                                                                                                                                0.04
                                                       0.0 3




                                                                                           0 .03




                                                                                                                               0.03
                                                                                                                                      0.02
                                                                                                   0.0 1




                                                0.10
                                                                                                                                             0 .00
                                                               0.00




                                                                             0.00




                                                0.00
                                                       D ow Jones             S&P 500              FT SE 100                   Nikkei 225               Ha ng Seng            MSC I EM              JSE ALSI


                                                                                                           Gold           JSE Gold Index             Phily Au & Ag


                               Source: Bloomberg, Nedbank Capital


                               The aforementioned largely macro-economic factors are supported by recovering jewellery
                               demand in India and strong growth in China. While saving rates and economic growth are high in
                               these markets, the simple fact that gold is generally expected to climb higher should bolster
                               demand.



                               US$ losing relevance
                               A weak US$ no longer automatically implies a stronger gold price. Over time the correlation
                               between the two has weakened considerably as a wide variety of new catalysts has emerged.
                               Since end-2009, the R2 coefficient between the US$ and gold (measured since 2000) has
                               declined from a statistically relevant 0.758 to far less significant 0.5407.




Gold Mining | Investment View | 6 December 2010                                                                                                                                                                           3
                                                                                                                                                                                                                          3
Chart 2 : Correlation between gold and the US$ (2000 to date)

            1.70

            1.60

            1.50

            1.40
 EUR/USD




            1.30

            1.20

            1.10

            1.00
                                                                                                                                                                                         y = 0.0004x + 0.947
            0.90
                                                                                                                                                                                             R2 = 0.5306
            0.80
                   200          300              400               500              600               700        800          900        1 000         1 100       1 200           1 300            1 400           1 500
                                               2000 - date                              2000                           2001
                                                                                                               Gold price (USD/oz)                    2002                              2003
                                               2004                                     2005                           2006                           2007                              2008
                                               2009                                     2010                           Linear (2000 - date)


Source: Nedbank Capital, I-Net


                                                                 The bull gold cycle certainly coincides with the US$ weakening significantly against all major
                                                                 currencies. A weaker US$ makes gold cheaper in other currencies, and buys more of those
                                                                 currencies when it strengthens again. Leading up to the economic and financial crises and the
                                                                 ensuing collapse of Lehman Brothers in September 2008 this was the dominant catalyst for gold.

Chart 3 : US dollar performance (2002 to date)                                                                           Chart 4 : Gold price performance (2002 to date)

           USD Index                          (31. 6%)                                                                        USD/oz                                                               390.1%

           USD/ EU R                      ( 32.8%)                                                                            EU R/oz                                    229.2%

           USD/ GBP                                                         (6.7% )                                           GBP/oz                                                           3 57.3%

           U SD /CHF               (39 .6%)                                                                                   CHF /oz                             196.2%

            USD /JPY                   ( 36.1% )                                                                               JPY/oz                                  2 13.1%

           USD/Z AR                ( 40.5%)                                                                                   Z AR/oz                             190.9%

           USD/ AU D       ( 47.0% )                                                                                          AU D/oz                          159.7%

           USD/ CAD                    (35 .9%)                                                                               CAD/oz                                   214.2%

           U SD /BRL                                ( 25.1%)                                                                  BRL/oz                                           266 .8%

           USD/ RUB                                                                                 2.9%                      RUB/oz                                                                 404. 2%

            USD/IN R                                                            (5.3 %)                                        IN R/oz                                                          36 4.1%

           USD/ CNY                                        (19 .6%)                                                           CNY/oz                                               2 94.2%

           USD/T RY                                                                                 2 .1%                     T RY/oz                                                               40 0.2%

                    (60. 0%) (50 .0%) (40 .0%) (3 0.0%) (20 .0%) (1 0.0%)                   0 .0%     1 0.0%                         0.0%        10 0.0%       200.0%          300 .0%          400.0%           500.0%



Source: Nedbank Capital, I-Net                                                                                           Source: Nedbank Capital, I-Net


                                                                 Since then, we believe that gold has been supported by quantitative easing (QE), which has
                                                                 flushed the market with liquidity, the debasement of fiat currencies, anaemic economic growth and
                                                                 the prospect of interest rates remaining low.

                                                                 Shorter-term trends confirm that gold has decoupled from the US$, gaining against all currencies
                                                                 even as the dollar strengthens.

Chart 5 : US$ performance (4 weeks)                                                                                       Chart 6 : Gold price performance (4 weeks)

           USD Index                                                                      4. 3%                               USD/oz          0.6%

           USD/ EU R                                                                                5.1 %                     EU R/oz                                                                     5.8%

           USD/ GBP                                                     2 .8%                                                 GBP/oz                                       3.4%

           U SD /CHF                                       1.9%                                                               CHF /oz                            2.5%

            USD /JPY                                                                       4 .5%                               JPY/oz                                                            5 .1%

           USD/Z AR                                              2.2%                                                         Z AR/oz                                  3.0 %

           USD/ AU D                                        2.0%                                                              AU D/oz                             2.6%

           USD/ CAD      (0.1 %)                                                                                              CAD/oz          0.5%

           U SD /BRL                                       1.9%                                                               BRL/oz                             2.5%

           USD/ RUB                                       1.8%                                                                RUB/oz                            2.4%

            USD/IN R                                                      3.1%                                                 IN R/oz                                           3.7%

           USD/ CNY      (0.0% )                                                                                              CNY/oz          0 .6%

           USD/T RY                                                               3.8%                                        T RY/oz                                                   4 .4%

                     (1.0 %)   0.0%       1.0%           2.0 %      3.0%         4.0%       5.0%        6.0%                         0.0%     1 .0%     2.0%      3.0%         4.0%       5 .0%      6.0%         7.0%



Source: Nedbank Capital, I-Net                                                                                           Source: Nedbank Capital, I-Net


Gold Mining | Investment View | 6 December 2010                                                                                                                                                                             4
                                                                                                                                                                                                                            4
Chart 7 : US$ performance (7 days)                                                                                                                               Chart 8 : Gold price performance (7 days)

    USD Index                                                       2.4%                                                                                                   USD/oz                                        0.9%

    USD/ EU R                                                                                                      3.8%                                                    EU R/oz                                                                                                                                                                4 .7%

    USD/ GBP                                                              2.7 %                                                                                            GBP/oz                                                                                                                                3.6%

    U SD /CHF                       1.0%                                                                                                                                   CHF /oz                                                                               2.0%

     USD /JPY                0.7%                                                                                                                                          JPY/oz                                                              1.6%

     USD/Z AR                                                       2.4%                                                                                                   Z AR/oz                                                                                                                     3 .3%

    USD/ AU D                                             2.2%                                                                                                             AU D/oz                                                                                                               3.2%

    USD/ CAD           0.4%                                                                                                                                                CAD/oz                                                           1.4%

     U SD /BRL                0.8%                                                                                                                                         BRL/oz                                                                      1.7%

    USD/ RUB                     0.9%                                                                                                                                      RUB/oz                                                                         1.9%

     USD/IN R                          1.2%                                                                                                                                IN R/oz                                                                                  2.2%

    USD/ CNY           0 .5%                                                                                                                                               CNY/oz                                                           1.4%

     USD/T RY                                                                                        3.3%                                                                  T RY/oz                                                                                                                                                  4.3%

             0.0 %   0.5 %     1.0 %    1.5%   2.0%                2.5%        3.0%              3.5%              4.0%                                                               0.0%                           1. 0%                             2.0%                         3.0%                            4.0%                          5.0%



Source: Nedbank Capital, I-Net                                                                                                                                   Source: Nedbank Capital, I-Net




                                               ETFs continue to increase accessibility of gold
                                               Gold ETFs (exchange-traded funds) continue to find strong support. While holdings in the main
                                               funds have remained relatively stagnant, total holdings have grown due to the increasing number
                                               of new funds being created globally. Since 2005, the number of gold ETFs has grown from four to
                                               more than 18.

                                               Chart 9 : Tonnes held in gold ETFs

                                                                    2,500



                                                                    2,000



                                                                    1,500
                                                      Tonnes (t)




                                                                    1,000



                                                                     500



                                                                          0
                                                                              Jan-0 4




                                                                                                                                                                                     Oct-06
                                                                                                 Jul-04
                                                                                                          Oct-04

                                                                                                                   Jan-05



                                                                                                                                     Ju l-05

                                                                                                                                               Oct-05
                                                                                                                                                        Jan-06

                                                                                                                                                                  Apr-06

                                                                                                                                                                            Jul-06




                                                                                                                                                                                                       Apr-07

                                                                                                                                                                                                                Jul-07

                                                                                                                                                                                                                         Oct-07



                                                                                                                                                                                                                                             Ap r-08
                                                                                                                                                                                                                                                        Jul-08

                                                                                                                                                                                                                                                                  Oct-08




                                                                                                                                                                                                                                                                                             Jul-0 9
                                                                                                                                                                                                                                                                                                        Oct-09

                                                                                                                                                                                                                                                                                                                 Jan-10



                                                                                                                                                                                                                                                                                                                                   Ju l-10
                                                                                        Apr-04




                                                                                                                            Apr-05




                                                                                                                                                                                                                                                                                    Apr-09




                                                                                                                                                                                                                                                                                                                          Apr-10



                                                                                                                                                                                                                                                                                                                                             Oct-10
                                                                                                                                                                                              Jan-07




                                                                                                                                                                                                                                  Ja n-08




                                                                                                                                                                                                                                                                           Jan-09




                                                                                                                                                                  GLD US Equity                             GBS LN Equity                              Others


                                               Source: Bloomberg, Nedbank Capital




                                               Changes to our forecasts
                                               With little sign of diminishing support for the metal, we again raise our gold price forecasts. We
                                               have significantly hiked our US$-based price forecasts for the next three years, and see further
                                               upside risk to our estimates. However, in US$ terms, much of the gains are offset by the stronger
                                               rand, limiting the impact on our valuations.

                                               Within the average of US$1,350/oz, we believe gold may well test the US$1,500/oz mark in 2011.




Gold Mining | Investment View | 6 December 2010                                                                                                                                                                                                                                                                                                           5
                                                                                                                                                                                                                                                                                                                                                          5
Table 1 : Changes to our gold price and currency forecasts

                                                       2007A     2008A     2009A     2010F     2011F     2012F       2013F Long term
Gold price (US$/oz)                        New           696       872       972      1,221     1,350     1,250       1,150    900 (real)
                                           Previous                                   1,176     1,200     1,100   900 (real)
                                           %-change                                   3.8%     12.5%     13.6%       18.7%
Gold price (ZAR/kg)                        New        157,191   229,761   261,086   288,143   324,924   320,016    305,025          +4%
                                           Previous                                 294,746   327,189   308,389    264,878
                                           %-change                                  (2.2%)    (0.7%)     3.8%       15.2%
Exchange rate (US$/ZAR)                    New           7.04      8.25      8.40      7.35      7.49      7.96        8.25         +4%
                                           Previous                                    7.79      8.48      8.72        9.07
                                           %-change                                  (5.6%)   (11.7%)    (8.7%)      (9.0%)
Source: Nedbank Capital forecasts, I-Net




Gold Mining | Investment View | 6 December 2010                                                                                        6
                                                                                                                                       6
                               Popular misconceptions

                               In this chapter we test the validity of some popular beliefs about the South African gold
                               sector. Often these perceptions are based on long-term trends that we believe do not
                               detract from shorter-term opportunities.



                               Gold shares always underperform
                               This depends when you look at it, which shares you look at and which gold price you look at. In
                               the longer term, however, this is certainly the case. During the current bull cycle, South African
                               gold miners have severely lagged, and even the Philadelphia Gold & Silver Index (AUX) has
                               underperformed gold, increasing ‘just’ 287% versus a 391% hike in the price of gold.

                               Even more concerning is the fact that, despite the highly conducive macro environment, gold
                               shares have severely underperformed the JSE All Share Index (ALSI).

                               Chart 10 : Relative performance of gold and equities (2002 to date)

                                       Gold ( $/oz)                                                                                                 391%

                                      Gold ( R/kg)                                                                1 91%
                                   Plat inum ( $/oz)                                                                       243%

                                   Platinum ( R/kg)                                                104%
                                    JSE Au In dex                                           63%

                                     JSE Pt In dex                                                     121 %
                                              ALSI                                                                194%

                                              AN G                                         57%

                                               GFI                                                 103%
                                              HAR                             3%

                                              PAN

                                              GBG

                                              D RD              ( 80% )

                                                  ( 200%)        ( 100% )    0%               100%             200 %              3 00%           4 00%      500%



                               Source: Nedbank Capital, I-Net


                               Looking at the performance of gold equities since the September 2008 collapse of Lehman, the
                               JSE Gold Index has lagged the price of gold in US$ terms, but outperformed the price in rand
                               terms. In the South African context the rand gold price is obviously far more relevant.

                               The gold sector has outperformed the ALSI by some margin in the same time period. Notably,
                               Gold Fields, which has consistently been the best performer in the sector from a longer-term
                               perspective, outperformed gold in both rand and US$ terms over this period.

                               Chart 11 : Relative performance of gold and equities (September 2008 to date)


                                       Gold ($/oz)                                                                                          75.1%

                                      Gold (R/kg)                                                                         53.7%
                                   Plat inum ($/oz)                                                       39.1%

                                   Platinum ( R/kg)                                        23.0%
                                     JSE Au In dex                                                                                62.2%

                                     JSE Pt In dex           (2.1%)
                                              ALSI                                   1 9.8%

                                              AN G                                                                                        71.2%
                                               GFI                                                                                                   83.3%
                                              HAR                                             27.6 %

                                              PAN                                                                           57.4%
                                              GBG                                                                           57.6%

                                              D RD          (4.2%)

                                                 (20.0% )             0.0%        20 .0%               40.0%              60.0%             80 .0%           100.0%



                               Source: Nedbank Capital, I-Net




Gold Mining | Investment View | 6 December 2010                                                                                                                       7
                                                                                                                                                                      7
                               From a shorter-term perspective (ie, the last three months), the JSE Gold Index has also
                               outperformed the price of gold in rand terms, but lagged the price in US$ terms. Again, Gold
                               Fields stands out as the top performer among the majors, outperforming the price gain of gold.
                               Similarly, following underperformance relative to the majors to date, juniors strongly outperformed
                               the price of gold.

                               Chart 12 : Relative performance of gold and equities (last three months)


                                       Gold ($/oz)                                    9%

                                      Gold (R/kg)                       5%
                                   Plat inum ($/oz)                                  8%

                                   Platinum ( R/kg)                 4%
                                     JSE Au In dex                            7%

                                     JSE Pt In dex                                                         15 %
                                             ALSI                                                 13%

                                             AN G                    4%
                                               GFI                                         10%
                                              HAR                        5%

                                              PAN                                                                                                    2 9%
                                             GBG                                                                                            24 %

                                             D RD                                         10%

                                                  0.0%             5.0%               10.0%          15.0 %               20.0%             25.0 %   30.0%        35.0 %



                               Source: Nedbank Capital, I-Net


                               Even shorter-term performance confirms this trend, with the JSE Gold Index strongly
                               outperforming both gold (in rand terms) and the ALSI, and Gold Fields outperforming its peers.

                               Chart 13 : Relative performance of gold and equities (last four weeks)


                                       Gold ($/oz)                                                          0%

                                      Gold (R/kg)                                                                                 2%

                                   Plat inum ($/oz)        ( 5%)

                                   Platinum ( R/kg)                          ( 3%)
                                     JSE Au In dex                                                                                      3%

                                     JSE Pt In dex                                                              0%
                                             ALSI                                                               0%

                                             AN G                                                                     1%

                                               GFI                                                                                                           7%

                                              HAR                                                                            2%

                                              PAN                                                                                      3%
                                             GBG                                                 (0 %)

                                             D RD                                                                    1%

                                                 ( 6.0%)           (4.0% )            (2.0 %)            0.0%             2.0%              4.0%     6. 0%        8.0%



                               Source: Nedbank Capital, I-Net


                               In our view, gold and gold equities are preferred investment vehicles in times of economic crisis
                               and uncertainty, hence their low correlation to general equity indices which underperform in these
                               times (refer to Chart 1).



                               Gold shares are a long-term investment
                               Not now, not ever. The previous section (“Gold shares always underperform”) already gave an
                               indication that this is hardly the best investment strategy. During the bull cycle, the JSE Gold
                               Index has underperformed gold by 328% in US$ terms and by 128% in rand terms. Only in the
                               shorter term, when selecting exposure based on relative performance and relative valuations, will
                               gold shares generate competitive returns. We can think of no catalysts that will change this on a
                               sustainable basis.

                               To demonstrate we look at two consecutive 90-day periods. After AngloGold Ashanti and Gold
                               Fields posted strong performances over the first period (see Chart 14), one could expect some
                               slow down, if not a correction, in the following period, which is the case illustrated in Chart 15.

Gold Mining | Investment View | 6 December 2010                                                                                                                            8
                                                                                                                                                                           8
                                                    Also, laggards in the first period, like Pan African Resources and Great Basin Gold, could be
                                                    expected to outperform in the following period, which is also the case.

                                                    In both instances, individual shares outperform gold. While this method is not fool proof, our
                                                    analysis shows that relative performance is critical in selecting exposure to the sector.

Chart 14 : Relative performance of gold and equities (90                                            Chart 15 : Relative performance of gold and equities (90
days)                                                                                               days)

        Gold ( $/oz)                                                             7 .1%                      Gold ( $/oz)                                              2.6%

       Gold ( R/kg)                                                                10.0%                   Gold ( R/kg)                              ( 1.6%)

    Plat inum ( $/oz)                                  ( 2.3%)                                          Plat inum ( $/oz)                            (1.8% )

    Platinum ( R/kg)                                       ( 0.2%)                                      Platinum ( R/kg)                         ( 5.2% )

     JSE Au In dex                                                                       12 .6%          JSE Au In dex                                   (1.4 %)

      JSE Pt In dex                                                        4.6 %                          JSE Pt In dex             (14 .9%)

               ALSI                                     (1.9% )                                                    ALSI                                            0.0%

               AN G                                                                        15.2%                   AN G                             ( 2.6%)

                GFI                                                                        15 .7%                   GFI                                            0.0%

               HAR                                                       1. 5%                                     HAR                                             0.4 %

               PAN                                      ( 1.4%)                                                    PAN                                                                20.3%

               GBG                                         (1.0% )                                                 GBG                                                                     22.5%

               D RD     (29.3% )                                                                                   D RD                        (8.2% )

                  ( 40.0% )   (30.0 %)   ( 20.0%)   (10.0 %)      0.0%       10.0%         2 0.0%                      ( 30.0% )    (20.0 %)     ( 10.0%)      0.0%        10.0%   20.0%     3 0.0%



Source: Nedbank Capital, I-Net                                                                      Source: Nedbank Capital, I-Net




                                                    The strong rand is accelerating the industry’s decline
                                                    Not so! Through the bull cycle (since 2002) gold has certainly been one of the weaker performers
                                                    in rand terms, but it’s easy to forget the rand blow-out towards end-2001, which resulted in a near
                                                    record closing price of around R106,000/kg.

                                                    However, longer-term price performance shows a different picture. Since the beginning of 2000,
                                                    gold has actually been the second-strongest performer in rand terms.

Chart 16 : Gold price performance since 2002                                                        Chart 17 : Gold price performance since 2000

    USD/oz                                                                       400.4%                 USD/ oz                          376.7%

    EU R/oz                                         242.6%                                              EUR/ oz                     270.0%

    GBP/oz                                                               367.6%                         GBP/ oz                           394.7%

    CHF /oz                                  202.5%                                                     CHF/ oz                199.9%
    JPY/oz                                     218.3%                                                   JPY / oz                     290.2%

    Z AR/oz                                 195.8%                                                      ZA R/ oz                                451.0%
    AU D/oz                              166.4%                                                         AUD/ oz                    224.6%
    CAD/oz                                        222.4%                                                CA D/ oz                   237.9%

    BRL/oz                                             271 .3%                                          B RL/ oz                        352.4%
    RUB/oz                                                                         417.1 %              RUB / oz                                450.4%
    IN R/oz                                                               374.5 %                        INR/ oz                            401.5%
    CNY/oz                                                     302.5 %                                  CNY / oz                     283.2%
    T RY/oz                                                                        416.5%               TRY / oz                                                                       1220.3%

           0.0%         10 0.0%          200.0%       300 .0%            400.0%            500.0%               0.0%        200.0% 400.0% 600.0% 800.0% 1000.0% 1200.0% 1400.0%



Source: Nedbank Capital, I-Net                                                                      Source: Nedbank Capital, I-Net


                                                    Even now, as the industry and unions choose to bemoan rand strength, the price of gold in rand
                                                    terms is at around R315,000/kg – not far from the record R321,357/kg achieved in February 2009.

                                                    Margins at key producers have certainly been under pressure, but have and are recovering to
                                                    what we consider very healthy levels. in our view, previous margin pressure had little to do with
                                                    the rand and was primarily due to poor efficiencies, limited mining flexibility and high capital
                                                    expenditure to fix omissions (ie, ore reserve development) of the past.




Gold Mining | Investment View | 6 December 2010                                                                                                                                                       9
                                                                                                                                                                                                      9
Chart 18 : Cash costs margins                                                                                      Chart 19 : Replacement cost margins

                             60%                                                                                                                         40%


                             50%                                                                                                                         30%




                                                                                                                     Replacement cost margins (%)
                             40%
  Cash cost margins (%)




                                                                                                                                                         20%


                             30%
                                                                                                                                                         10%

                             20%
                                                                                                                                                          0%

                             10%
                                                                                                                                                        (10%)

                               0%
                                     1Q      4Q         3Q          2Q       1Q        4Q          3Q      2Q                                           (20%)
                                    2007A   2007A      2008A       2009A    2010A     2010F       2011F   2012F                                                 2002A      2004A        2006A         2008A     2010F       2012F


                                                            ANG             GFI             HAR                                                                                       ANG            GFI       HAR


Source: Company reports, Nedbank Capital                                                                           Source: Company reports, Nedbank Capital


                                                                           Often, the rand weakens when the price of gold in US$ terms weakens, thereby offsetting the
                                                                           impact on the price rand-denominated gold price on revenue. Unfortunately, this is seldom
                                                                           reflected in ratings, as the market tends to follow the US$-denominated gold price.

Chart 20 : Gold price performance (4 weeks)                                                                        Chart 21 : Gold price performance (7 days)

                      USD/oz                        2.4%                                                                                            USD/oz                     0.4%

                      EU R/oz                                                                      9.6%                                             EU R/oz                                                          3.5%

                      GBP/oz                                           5.6%                                                                         GBP/oz                                            2.0%

                      CHF /oz                              3.5%                                                                                     CHF /oz                             1.1%

                          JPY/oz                                             6.4%                                                                   JPY/oz                            0.9%

                      Z AR/oz                                        5.2%                                                                           Z AR/oz                                  1.3%

                      AU D/oz                                         5. 5%                                                                         AU D/oz                                           2.0%

                      CAD/oz                                3.7%                                                                                    CAD/oz                            0.8%

                          BRL/oz                       3.0 %                                                                                             ( 0.7%)
                                                                                                                                                    BRL/oz

                      RUB/oz                                       4.8 %                                                                            RUB/oz                              1.0%

                          IN R/oz                                      5.7 %                                                                        IN R/oz                           0. 9%

                      CNY/oz                   2. 0%                                                                                                CNY/oz                         0.8%

                      T RY/oz                                                          8.0%                                                         T RY/oz                                         1 .8%

                                0.0%        2 .0%          4.0%       6.0%          8 .0%         10.0%    12.0%                                          (1.0% )       0.0%       1.0%             2.0%      3.0%      4.0%



Source: Nedbank Capital, I-Net                                                                                     Source: Nedbank Capital, I-Net




                                                                           South African mines are the highest cost producers
                                                                           To a large extent we believe this is true, especially if one just focuses on total cash costs. But
                                                                           again it depends on which mines, and, more importantly, which company one looks at. The
                                                                           following chart compares total cash costs of the South African region of local gold miners with
                                                                           some of their North American peers.

                                                                           According to the VM Group, average costs for a total of 232 mines globally was US$558/oz as of
                                                                           2Q10. AngloGold Ashanti was close to this average, with total cash costs of US$560/oz, while
                                                                           individual operations like Mponeng (US$408/oz) and Kopanang (US$542/oz) achieved costs
                                                                           below this average.




Gold Mining | Investment View | 6 December 2010                                                                                                                                                                                10
                                                                                                                                                                                                                               10
                               Chart 22 : Total cash cost comparison (2Q 2010)

                                                              1,000

                                                               900

                                                               800

                                                               700




                                 Total cash costs (US$/oz)
                                                               600

                                                               500

                                                               400

                                                               300

                                                               200

                                                               100




                                                                      925




                                                                              822




                                                                                             778




                                                                                                            650




                                                                                                                        560




                                                                                                                                     492




                                                                                                                                                  457




                                                                                                                                                        363
                                                                 0
                                                                      DRD     HAR           GFI            PAN          ANG          NEM         ABX    GG


                                                                                                   Total cash costs      Global average


                               Source: Company data, VM Group, Nedbank Capital


                               In our view, replacement costs are far more relevant to profitability and cash flows, ie, total cash
                               costs plus capital expenditures. On this basis, AngloGold Ashanti and Pan African Resources
                               compare much better due to lower capital requirements.

                               Chart 23 : Comparison of replacement costs (2Q 2010)

                                                              1,200


                                                              1,000
                                 Replacement costs (US$/oz)




                                                               800


                                                               600


                                                               400


                                                               200
                                                                      1,129




                                                                              1,125




                                                                                             995




                                                                                                            975




                                                                                                                        871




                                                                                                                                     781




                                                                                                                                                  754




                                                                                                                                                        746
                                                                 0
                                                                      GFI     HAR           DRD            NEM          GG           ANG         ABX    PAN


                                                                                      GFI   HAR      DRD          NEM   GG     ANG         ABX   PAN


                               Source: Company data, Nedbank Capital




                               Gold shares trade at a premium to their NPV
                               This is hardly surprising as gold miners are usually valued under the assumption that costs will
                               escalate and the price of gold will decline from current spot levels. This is especially true now,
                               when gold is continually reaching new highs and testing uncharted territory. Naturally few – us
                               included – trust that the bull cycle will be sustained ad infinitum, expecting prices to decline at
                               some point. To top it all off, valuation is based on a finite asset/reserve ratio and assumes a finite
                               life.

                               Valuing gold stocks at spot rates over their life and keeping costs and, consequently, margins flat
                               presents a different picture. The table below compares the price-to-NPV multiple the share prices
                               imply based on Nedbank’s gold price and exchange rate assumptions against the multiple at spot
                               rates (US$1,384/oz, US$/ZAR7.09). As the table below illustrates, all stocks under our coverage
                               trade at substantial discounts to their NPVs. Given that any gold price forecast is a guess at best,
                               we consider this the most effective way of getting a sense of what the market is discounting.




Gold Mining | Investment View | 6 December 2010                                                                                                               11
                                                                                                                                                              11
                               Table 2 : Price-to-NPV multiples using Nedbank assumptions and spot rates

                                                                 ANG      GFI     HAR        PAN      GBG     DRD
                               Last price (cps)                 32837   11566     7895       107      2000    345
                               Nedbank assumptions               1.94    1.70      2.47      1.08      2.30   2.30
                               Spot rates                        0.79    0.67      0.72      0.65      0.67   0.26
                               Source: Nedbank Capital, I-Net




Gold Mining | Investment View | 6 December 2010                                                                  12
                                                                                                                 12
                                                   Investment stance

                                                   While gold keeps testing new highs, equities remain range bound and give little indication
                                                   of reaching new highs. We see no near- to medium-term catalysts to change this. For now
                                                   we pin our hopes to juniors that can still create value through growth from a lower base.



                                                   Juniors continue to outperform
                                                   Quality juniors like Pan African Resources and Great Basin Gold have performed strongly over
                                                   the last 12 months. This at a time when established majors were largely range bound and juniors
                                                   started to deliver on their projects. We also believe it is far easier to generate growth and value
                                                   from a smaller base. Small-scale projects like Phoenix (PAN) require little capital, and low lead
                                                   times can make a significant difference to the value of juniors. Projects that materially affect the
                                                   value and rating of a major require long lead times and are capital intensive; capital that is often
                                                   funded through value-eroding debt or equity placements.

Chart 24 : Performance of gold shares (last 12 months)                                  Chart 25 : Performance of gold share (last 3 months)

    ANG                   (0.6% )                                                           ANG                               6.5%
     GF I                                 7.1%                                               GF I                                    11. 2%

    H AR                 (3 .1%)                                                            H AR                          5.7%
    PAN                                            21.6%                                    PAN                                                    20.2%

    GBG                                                                     73.9%           GBG                                                              29.0%
    DR D                ( 4.4% )                                                            DR D                                       13.1%
    ABX                                          17.4%                                      ABX                                          13.9%

    NEM                                    10.3%                                            NEM      (2 .5%)
     GG                               2 .6%                                                  GG                           5.0%

    AMS           ( 11.8% )                                                                 AMS                       2.1 %
     IMP                                         16 .7%                                      IMP                                      11 .7%

    AGL                  (2.3% )                                                            AGL                                       12.0%
     BIL                                   10.3%                                             BIL                                               16.5%
     RIO                                                  32.3%                              RIO                                               16.5%

       (40.0 %)   (20 .0%)         0.0%       20.0%        40.0%   60. 0%   8 0.0%             (10.0 %)        0.0%           10.0%            20.0%       30.0%     4 0.0%



Source: Nedbank Capital, I-Net                                                          Source: Nedbank Capital, I-Net




                                                   Valuation methodology

                                                   We include five valuation metrics in our new methodology:

                                                          Price-to-NPV;

                                                          Price-to-book;

                                                          EV/EBITDA;

                                                          Price-to-cash earnings; and

                                                          EV per reserve ounce.
Equally weighted valuation                         Our 12-month target price is calculated as an equally weighted (20%) average of these five
metrics reduce the risk of                         metrics. In our view, an equal weighting eliminates the risk of under- or overvaluing a stock based
under- or overvaluing a
stock based on one single                          on one multiple with a higher weighting. Also, we find that the target price determined with this
multiple                                           methodology is generally within 5% of the price determined solely with our established price-to-
                                                   NPV methodology.

                                                   As a reality check, each valuation metric implied by the target price is then compared with
                                                   historical trading ranges.

                                                   The respective exit multiples we use to determine our target prices are normally based on a 12-
                                                   month average. However, adjustments are made depending on where the company is in its life
                                                   cycle, and historical multiples are not representative of outlook. Great Basin Gold, which is
                                                   developing two start-up projects, is an example of this. Also, if certain counters appear under- or
                                                   overvalued on one measure, we reserve the right to apply an exit multiple in line with that of its
                                                   peer group.

Gold Mining | Investment View | 6 December 2010                                                                                                                               13
                                                                                                                                                                              13
                               Price-to-NPV
                               This is the most controversial of all valuation methodologies, but still our firm favourite. As our
                               model is built by quarter, we can calculate the NPV at any given period in the past or in the future.
                               By dividing the NPV into the respective share price of the day or the average for the quarter, we
                               can determine historical trading ranges. Plotting historical price-to-NPV multiples against the
                               share price over time offers a good indication of when the share is cheap and likely to re-rate, or
                               expensive and likely to de-rate.

                               This provides a sense of current market sentiment and whether the share is relatively cheap or
                               expensive based on previous multiples and vs its peers.

                               Given the gold market consistent buoyancy, we believe it is still appropriate to apply peak-cycle
                               multiples of 2.5x for gold majors and 2.0x for juniors.

                               Price-to-NPV multiples are bound to vary greatly among analysts depending upon their
                               assumptions for production volumes, yields, productivity, costs, capex, gold price and exchange
                               rates. Hence, to be meaningful, consistency in individual application is crucial. Barring a brief
                               period between September 2008 and February 2009, when we reduced our exit multiple to 2.0x
                               due to highly volatile market conditions, we have consistently used an exit multiple of 2.5x.

                               Our NPV calculation is based on a nominal US$ operating free cash flow and a discount rate of
                               5%.

                               Price-to-book
                               Tangible book value = total assets - intangible assets - liabilities

                               This is the value of the share if the company were to liquidate all its assets.

                               Again, our model allows us to determine historical price-to-book values and, therefore, to assess
                               whether the share is under - or overvalued against its prior performance and against its peers.
                               Reputable blue-chip companies often trade on higher price-to-book multiples than their more
                               volatile or smaller peers, but offer lower returns (ROE, ROA), and can incur the highest losses
                               since the book value is the lowest value at which a share can theoretically trade. AngloGold
                               Ashanti is an example of this.

                               EV/EBITDA
All exit multiples are         EV = market capitalisation + debt + minorities - cash
checked against their
historical ranges              We consider this a sound alternative to PE ratios, which we find too distorted, erratic and
                               unpredictable in the gold sector. The enterprise value represents the theoretical takeover value of
                               a company. This is a useful reference point in the junior-to-mid-tier sector, where M&As are rife.

                               As with all our other valuation metrics, historical trading ranges offer an indication of whether the
                               share is cheap or expensive and whether the multiple implied by our target price is realistic.

                               Price to cash earnings
                               Cash earnings = EBIT + amortisation/depreciation - taxes

                               In our view, cash earnings are the cleanest and most predictable earnings as they eliminate any
                               distortion of through non-cash items or exceptionals. Historical trading ranges offer an indication
                               of absolute and relative value.

                               Enterprise value (EV) per reserve ounce
                               This metric, much like market capitalisation per reserve ounce, is an indication of the market’s
                               perception of the quality of the ore reserve and the company itself. Quality in this sense refers to
                               geographical and operational risk, grade and volume. Usually, companies with a higher exposure
                               to open-pit mining and little exposure to Africa and deep-level South African mining in particular
                               are likely to trade at higher values.




Gold Mining | Investment View | 6 December 2010                                                                                    14
                                                                                                                                   14
                                       Reality check
                                       The following table compares the valuation multiples implied by our target prices with each
                                       company’s historical range. The long-term average is calculated over a 10- to 12-year period.

Table 3 : Valuation metrics

                                                        Long-term    36-month     12-month     3-month      Current Exit multiple    Implied by
                                                          average     average      average     average                              target price
Price/NPV                        ANG     x                    1.26        1.46         1.69        1.82         1.97        1.68           2.11
                                 GFI     x                    1.07        1.16         1.00        1.37         1.74        1.33           1.68
                                 HAR     x                    4.00        2.74         2.43        2.38         2.50        2.42           2.66
                                 GBG     x                  15.08         3.29         1.74        1.59         2.41        2.00           1.87
                                 PAN     x                    0.57        0.57         0.59        0.80         1.24        1.00           1.57
                                 DRD     x                    6.74        5.86         2.01        1.77         2.32        2.50           2.59
Price/BV                         ANG     x                     4.9         4.9          4.7         4.3          4.7          4.7           3.8
                                 GFI     x                     2.6         1.5          1.3         1.8          1.9          1.7           1.6
                                 HAR     x                     1.6         1.4          1.2         1.2          1.2          1.2           1.3
                                 GBG     x                     1.9         1.9          1.9         2.3          3.5          1.8           2.7
                                 PAN     x                     1.2         1.2          1.1         1.1          1.8          1.7           1.5
                                 DRD     x                     3.8         1.3          0.7         0.6          0.8          0.8           0.8
EV/EBITDA                        ANG     x                   10.6          9.3          7.7         7.0         24.5          7.7           5.7
                                 GFI     x                     9.7         5.5          4.0         5.1         21.2          6.0           4.9
                                 HAR     x                   26.7         15.4         16.0        13.9         37.9        10.0            7.9
                                 GBG     x                   72.9         72.9         63.4        37.2         72.8        10.0            7.6
                                 PAN     x                     2.1         2.1          1.7         1.6         20.1          3.6           1.8
                                 DRD     x                                              4.5         1.7          6.4          5.3           2.4
Price/cash earnings              ANG     x                   13.0          4.9          6.5         5.9          6.4          6.4           7.7
                                 GFI     x                   12.4          5.8          4.2         5.6          4.1          6.5           5.7
                                 HAR     x                     5.4        15.3         16.3        14.6         15.4        10.0            9.2
                                 GBG     x                   57.6         44.6          8.5         5.3          7.9          8.0           6.7
                                 PAN     x                     2.4         2.4          1.4         1.7          2.6          3.9           3.4
                                 DRD     x                     2.1         2.0          0.7         0.8          1.0          1.0           1.3
EV per reserve ounce             ANG     US$/oz               164          204         250          266         285          249            315
                                 GFI     US$/oz               100          122         119          169         186          144            178
                                 HAR     US$/oz               113          123         120          123         130          121            148
                                 GBG     US$/oz                68           81          60           62          93           59             91
                                 PAN     US$/oz               164          151          83          110         173          152            224
                                 DRD     US$/oz                26           25          19           21         101           23             31
Source: Nedbank Capital, I-Net




                                       In summary, the vast majority of the valuation multiples implied by our target prices are in line with
                                       historical trading ranges. We have made adjustments to our exit multiples for Harmony’s
                                       EV/EBITDA and price-to-cash earnings, as we expect EBITDA and cash earnings to pick up
                                       notably in the coming year.

                                       The implied price-to-book, EV/EBITDA and price-to-cash-earnings multiples are mostly below
                                       historical ranges, confirming, in our view, that our target prices are not too aggressive.




Gold Mining | Investment View | 6 December 2010                                                                                              15
                                                                                                                                            15
Equity | South Africa | Mining


                                 6 December 2010                                                                                                                               Produced by: Nedbank Capital




                                 Change of recommendation
                                                                                           AngloGold Ashanti
                                 Hold (from Buy)                                           Downgrade to Hold
                                 Target price
                                 R360.00 (from R388.00)
                                                                                           The rerating we were hoping for following the termination of the company's
                                                                                           hedge book has not materialised. GFI continues to outperform ANG, having
                                 Price
                                 R336.99                                                   gained 8% vs the latter's 4% since 20 September. For now, we believe the share is
                                 Short term (0-60 days)                                    near its peak and we downgrade to Hold (from Buy).
                                 n/a
                                 Market view                                               Key forecasts
                                 Underweight
                                                                                                                                                                FY08A     FY09A    FY10F      FY11F       FY12F
                                                                                           Revenue (Rm)                                                         30,121    30,745   39,164    46,543       45,397
                                 Price performance                                         EBITDA (Rm)                                                           9,198    15,593   14,729 % 20,084        17,914
                                                                                           Reported net profit (Rm)                                             -16,746   -2,571    1,196 & 8,580 % 7,688 %
                                                            (1M)       (3M)    (12M)
                                                                                           Normalised net profit (Rm)                                            4,908     9,385    7,054 % 8,580 % 7,688 %
                                 Price (R)                 323.2      312.9    338.0
                                                                                           Normalised EPS (R)                                                    14.80     26.20    19.00 % 22.30 % 20.00 %
                                 Absolute (%)                 5.0        8.5         0.4
                                 Rel market (%)               3.1       -3.4    -12.6      Dividend per share (R)                                                39.90     133.2    134.5 % 439.6 % 393.2 %
                                 Rel sector (%)               0.4       -8.6     -5.8      Dividend yield (%)                                                    11.80     39.50    39.90      130.4        116.7
                                                                                           Normalised PE (x)                                                     22.80     12.90    17.70      15.10        16.90
                                   Dec 07         Dec 08            Dec 09
                                 400                                                       EV/EBITDA (x)                                                         15.40      8.63     9.24       6.37         6.67
                                                                                           EV/invested capital (x)                                                3.86      4.69     3.81       3.71         3.71
                                 350
                                                                                           ROIC - WACC (%)                                                        0.00      0.00     0.00       0.00         0.00
                                 300
                                                                                           Use of %& indicates that the line item has changed by at least 5%.                               year to Dec, fully diluted
                                 250                                                       Accounting standard: IFRS
                                                                                           Source: Company data, Nedbank Capital forecasts
                                 200

                                 150                                                       Tropicana gold mine adds value
                                         ANGJ J            Jo'burg All-Share Index         In our view, the development of the Tropicana gold mine in Australia will make a material
                                                                                           difference to the value of the company’s highest-cost region. Once the mine is in production,
                                 Market capitalisation
                                                                                           which we expect around late 2013, we expect the region to generate strong cash flows
                                 R128.45bn (€14.18bn)
                                                                                           following more than three years of losses.
                                 Average (12M) daily turnover
                                 R339.00m (€34.63m)                                        Net growth is limited
                                 Sector: JSE Mining
                                 RIC: ANGJ J, ANG SJ                                       Tropicana will be AngloGold Ashanti’s first greenfield development in a long time. However,
                                 Priced R336.99 at close 2 Dec 2010.
                                 Source: Bloomberg
                                                                                           the project’s net impact on incremental growth is likely to be negated by further declines in
                                                                                           South Africa’s output and ongoing problems optimising key assets like Obuasi. The project
                                                                                           has yet to establish a consistent trend, and another new team has been appointed to
                                                                                           facilitate a turnaround.

                                                                                           Vamping is not the solution
                                                                                           Management has highlighted its renewed focus on vamping, a process of gold reclamation
                                                                                           from old areas that can apparently be sustained over a long period. This is a basic step in the
                                                                                           mining process, and we are puzzled that it has been neglected to such an extent that it can
                                                                                           now boost output over a protracted period. We are equally puzzled that face advance has
                                                                                           declined materially over the last three years and that concerted efforts to reverse this are
                                                                                           only now are being made.

                                 Analyst                                                   Downgrade from Buy to Hold
                                                                                           We downgrade AngloGold Ashanti to Hold (from Buy) and lower our 12-month target price to
                                 Christian Siebert
                                 South Africa                                              R360 (R388) to reflect revisions to our gold price, exchange rate, production and cost
                                 +27 11 295 8212                                           assumptions. The risk profile of our forecasts is high.
                                 Csiebert@Nedbankcapital.co.za

                                 7/F Corporate Place 135 Rivonia Road,
                                 Johannesburg, South Africa

                                 http://research.rbsm.com                                  Important disclosures can be found in the Disclosures Appendix.




                                                                                                                                                                                                                         16
                               Assumptions
                               The following table summarises our key assumptions. We include the Tropicana mine in our
                               forecast, but believe that the company’s production target of one million additional ounces within
                               five years remains out of reach, as we see current production levels in South Africa becoming
                               increasingly difficult to maintain. We expect non-core operations like Great Noligwa and Savuka to
                               cease production within the next three years.

                               Table 1 : Summary of our assumptions

                                                                          2007 A   2008 A   2009 A   2010 F   2011 F   2012 F    2013 F    2014 F
                               Spot gold price                US$/oz         604      696      872      972    1,221    1,350     1,250     1,150
                                                              R/kg       131,580 157,191 229,761 261,086 288,143 324,924 320,016 305,025
                               Received gold price            US$/oz         531      629      485      751    1,178    1,350     1,250     1,150
                                                              R/kg       115,970 133,763 194,829 249,840 278,514 324,981 319,920 305,025
                               Exchange rate                  US$/R         6.76     7.04     8.25     8.40     7.35     7.49      7.96      8.25
                               Gold production                Moz       5,634,0005,477,0004,982,0004,599,0004,510,4554,604,5634,562,1644,403,765
                               Total cash costs               US$/oz         294      357      444      514      614      641      649       653
                                                              R/kg        64,113   77,804 111,681 127,887 144,936 154,406 166,033 173,166
                               Replacement costs (NCE)        US$/oz         465      583      716      769      907      959      927       887
                                                              R/kg       101,294 131,595 189,347 206,071 214,300 230,880 237,218 235,190
                               Cash cost margins              %           44.2%    41.8%    43.0%    48.7%    47.8%    52.5%     48.1%     43.2%
                               Replacement costs margins%                 16.7%      9.1%   10.4%    24.4%    30.9%    36.7%     33.0%     29.4%
                               Source: Company data, Nedbank Capital




                               Sensitivities
                               The starting point for our analysis is spot rates, which we have rounded off to US$1,350/oz and
                               USD/ZAR7.00 for the purposes of these calculations. Spot rates are entered into our models in
                               nominal terms over the life of the operations with 0% cost escalation. We then change the gold
                               price and the exchange rate in increments of US$50/oz and US$/ZAR0.50 and calculate the
                               impact on our target price, cash earnings and NPV estimates. The result of this calculation may
                               be interpreted as what the market is currently discounting.

                               Our sensitivity analysis indicates that our R360 target price is broadly in line with valuations at
                               current spot rates.

                               Table 2 : Sensitivities to our target price

                                                  US$/oz        1,150     1,200    1,250     1,300    1,350    1,400     1,450     1,500     1,550
                               US$/ZAR           5.00             212       217      223       229      234      240       246      251       257
                                                 5.50             237       243      249       255      262      268       274      280       286
                                                 6.00             262       269      276       282      289      296       303      309       316
                                                 6.50             287       294      302       309      317      324       331      339       346
                                                 7.00             312       320      328       336      344      352       360      368       375
                                                 7.50             337       346      355       363      372      380       389      397       405
                                                 8.00             362       372      381       390      399      408       417      426       435
                                                 8.50             388       398      407       417      427      436       446      455       464
                                                 9.00             413       423      434       444      454      464       474      484       494
                               Source: Nedbank Capital


                               Based on spot rates, we estimate that AngloGold Ashanti is trading at a 15% discount to its NPV.




AngloGold Ashanti | Financial Statements | 6 December 2010                                                                                          2
                                                                                                                                                17
                               Table 3 : Sensitivities to NPV

                                                  US$/oz   1,150   1,200   1,250   1,300   1,350   1,400   1,450   1,500   1,550
                               US$/ZAR           5.00        95     122     147     173     197     221     245     268     292
                                                 5.50        138    165     192     219     245     271     296     322     347
                                                 6.00        177    207     235     264     292     320     348     376     403
                                                 6.50        216    247     278     309     339     369     399     429     459
                                                 7.00        255    288     321     353     385     418     450     483     515
                                                 7.50        292    328     363     397     432     467     502     536     571
                                                 8.00        330    367     405     442     479     516     553     590     627
                                                 8.50        368    407     447     486     525     565     604     644     683
                                                 9.00        405    447     489     530     572     614     655     697     739
                               Source: Nedbank Capital




AngloGold Ashanti | Financial Statements | 6 December 2010                                                                     3
                                                                                                                              18
Income statement

Rm                                                         FY08A      FY09A      FY10F      FY11F            FY12F
Revenue                                                     30121      30745      39164      46543           45397
Cost of sales                                              -18689     -18587     -20436     -22855          -24229
Operating costs                                              -2234       3435      -3999     -3604            -3253
EBITDA                                                        9198     15593      14729      20084           17914
DDA & Impairment (ex gw)                                     -4785      -4633      -5147     -5184            -5481
EBITA                                                         4413     10960        9582     14900           12434
Goodwill (amort/impaired)                                       n/a        n/a        n/a       n/a              n/a
EBIT                                                          4413     10960        9582     14900           12434
Net interest                                                -400.8     -703.7     -918.0     -1609           -534.2
Associates (pre-tax)                                            n/a        n/a        n/a       n/a              n/a
Other pre-tax items                                        -21852     -11429       -5531       0.00            0.00
Reported PTP                                               -17840       -1173       3133     13291           11899
Taxation                                                      1218      -1171      -1438     -2658            -2372
Minority interests                                          -322.0      227.0     -498.4     -2053            -1840
Other post-tax items                                         198.0     -454.0        0.00      0.00            0.00
Reported net profit                                        -16746       -2571       1196      8580             7688
Tot normalised items                                       -21654     -11956       -5858       0.00             0.00
Normalised EBITDA                                             9198     15593      14729      20084           17914
Normalised PTP                                                4012     10783        8991     13291           11899
Normalised net profit                                         4908       9385       7054      8580             7688
Source: Company data, Nedbank Capital forecasts                                                          year to Dec



Balance sheet

Rm                                                         FY08A      FY09A      FY10F      FY11F            FY12F
Cash & market secs (1)                                      5438       8176       9568        9706           10132
Other current assets                                       21039      10105       9450      10267            10166
Tangible fixed assets                                      41081      43263      40606      37181            33270
Intang assets (incl gw)                                     1403       1316       1296       1296              1296
Oth non-curr assets                                         7241       9910       9620       9620              9620
Total assets                                               76202      72770      70540      68071            64483
Short term debt (2)                                        10046       9493       1864        1864             1864
Trade & oth current liab                                   22861      24344      12122      10588              8603
Long term debt (3)                                          8224       4862      15363        7363           -637.0
Oth non-current liab                                       11325      11547      13140      13316            13540
Total liabilities                                          52456      50246      42489      33131            23370
Total equity (incl min)                                    23746      22524      28051      34939            41113
Total liab & sh equity                                     76202      72770      70540      68071            64484
Net debt                                                   12832       6179       7659      -479.1            -8905
Source: Company data, Nedbank Capital forecasts                                                       year ended Dec



Cash flow statement

Rm                                                         FY08A      FY09A      FY10F      FY11F            FY12F
EBITDA                                                        9198    15593       14729     20084            17914
Change in working capital                                    -1407    -950.0       -1817    -377.1            247.5
Net interest (pd) / rec                                     -304.0    -501.0      -515.0     -1609           -534.2
Taxes paid                                                   -1242     -1230       -1517     -2658            -2380
Other oper cash items                                        -8815     -9632     -10322       1739             1540
Cash flow from ops (1)                                       -2570      3280       557.1    17179            16788
Capex (2)                                                    -9866     -8655       -6414     -7349            -6848
Disposals/(acquisitions)                                      1337      1337        1337      1337             1337
Other investing cash flow                                       n/a       n/a         n/a       n/a              n/a
Cash flow from invest (3)                                    -8529     -7319       -5077     -6012            -5511
Incr / (decr) in equity                                     13170       2301        5512       0.00             0.00
Incr / (decr) in debt                                         1983     749.9        2860     -8000            -8000
Ordinary dividend paid                                      -406.0    -474.5       -1128     -1692            -1514
Preferred dividends (4)                                         n/a       n/a         n/a       n/a              n/a
Other financing cash flow                                       n/a       n/a         n/a       n/a              n/a
Cash flow from fin (5)                                      14747       2576        7244     -9692            -9514
Forex & disc ops (6)                                           17.0   -672.6      -165.0       0.00             0.00
Inc/(decr) cash (1+3+5+6)                                     3666     -2135        2559      1475             1762
Equity FCF (1+2+4)                                         -12436      -5375       -5857      9830             9939
Source: Company data, Nedbank Capital forecasts                                                          year to Dec




AngloGold Ashanti | Key Financial Data | 6 December 2010
                                                                                                                19
Standard ratios                                         AngloGold                                      Gold Fields                              Harmony Gold

Performance                              FY08A FY09A FY10F FY11F FY12F                            FY10F FY11F FY12F                          FY11F    FY12F   FY13F
Sales growth (%)                           32.3     2.07      27.4       18.8   -2.46               6.41     9.97        -0.50                19.8     20.9     6.65
EBITDA growth (%)                          48.6     69.5     -5.54       36.4   -10.8               4.90     23.2        -8.32                93.9     52.9     5.03
EBIT growth (%)                           116.9    148.4     -12.6       55.5   -16.6              -2.60     37.7        -12.8               729.4    106.5     3.65
Normalised EPS growth (%)                  2161     77.4     -27.4       17.2   -10.4              -9.77     70.6        -11.6                 n/a    156.1     6.28
EBITDA margin (%)                          30.5     50.7      37.6       43.2    39.5               39.2     44.0         40.5                21.7     27.5     27.1
EBIT margin (%)                            14.7     35.6      24.5       32.0    27.4               23.8     29.7         26.1                8.59     14.7     14.3
Net profit margin (%)                      16.3     30.5      18.0       18.4    16.9               10.1     15.7         14.0                4.14     8.76     8.73
Return on avg assets (%)                   7.71     13.6      11.5       17.0    15.0               7.01     12.2         10.3                1.83     4.01     3.99
Return on avg equity (%)                   24.3     40.6      27.9       27.2    20.2               7.56     12.3         10.1                1.89     4.69     4.77
ROIC (%)                                   12.2     21.6      24.0       30.0    26.0               11.3     15.8         13.7                2.82     5.67     5.82
ROIC - WACC (%)                            0.00     0.00      0.00       0.00    0.00               0.00     0.00         0.00                0.00     0.00     0.00
                                                                           year to Dec                              year to Dec                           year to Jun

Valuation
EV/sales (x)                                4.69     4.38     3.48    2.75       2.63               2.66     2.33        2.25                  2.58    2.07     1.84
EV/EBITDA (x)                               15.4     8.63     9.24    6.37       6.67               6.77     5.30        5.56                  11.9    7.53     6.81
EV/EBITDA @ tgt price (x)                   16.3     9.20     9.84    6.81       7.16               6.77     5.30        5.56                  13.9    8.86     8.08
EV/EBIT (x)                                 32.0     12.3     14.2    8.59       9.61               11.2     7.83        8.64                  30.0    14.1     12.9
EV/invested capital (x)                     3.86     4.69     3.81    3.71       3.71               1.79     1.71        1.65                  1.14    1.10     1.06
Price/book value (x)                        5.02     5.42     4.62    3.71       3.16               1.86     1.73        1.62                  1.15    1.10     1.05
Equity FCF yield (%)                       -11.1    -4.45    -4.69    7.58       7.66               4.37     6.49        6.09                 -0.52    3.40     5.35
Normalised PE (x)                           22.8     12.9     17.7    15.1       16.9               25.0     14.6        16.5                  61.4    24.0     22.6
Norm PE @ tgt price (x)                     24.4     13.7     18.9    16.2       18.0               25.0     14.6        16.5                  72.1    28.2     26.5
Dividend yield (%)                          11.8     39.5     39.9   130.4      116.7              156.7    264.2       228.4                  28.7    41.7     44.3
                                                                           year to Dec                              year to Dec                           year to Jun

Per share data                           FY08A FY09A FY10F FY11F FY12F                   Solvency                                 FY08A FY09A FY10F FY11F FY12F
Tot adj dil sh, ave (m)                   332.3 358.1 370.9 384.9 384.9                  Net debt to equity (%)                     54.0  27.4  27.3 -1.37 -21.7
Reported EPS (ZAR)                        -50.4 -7.18  3.22  22.3  20.0                  Net debt to tot ass (%)                    16.8  8.49  10.9 -0.70 -13.8
Normalised EPS (ZAR)                       14.8  26.2  19.0  22.3  20.0                  Net debt to EBITDA                         1.40  0.40  0.52 -0.02 -0.50
Dividend per share (ZAR)                   39.9 133.2 134.5 439.6 393.2                  Current ratio (x)                          0.80  0.54  1.36  1.60  1.94
Equity FCF per share (ZAR)                -37.4 -15.0 -15.8  25.5  25.8                  Operating CF int cov (x)                  -3.37  10.0  5.03  13.3  36.9
Book value per sh (ZAR)                    67.2  62.2  72.9  90.8 106.8                  Dividend cover (x)                         35.1  19.7  13.9  5.07  5.08
                                                                           year to Dec                                                                    year to Dec

Priced as follows: ANGJ J - R336.99; GFIF.J - R120.99; HARJ.J – R80.00
Source: Company data, Nedbank Capital forecasts




Valuation methodology
Our 12 –month target price is based on an equally weighted average of five valuation metrics: price to NPV, price to book,
EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple but reserve the
right to make adjustments depending on where the company is in its life cycle and to bring multiples in line with industry averages.
Both up- and downside risks to our valuation include variations to our currency, gold price, production and cost assumptions.
Source: Nedbank Capital




AngloGold Ashanti | Performance and Valuation | 6 December 2010
                                                                                                                                                                 20
Company description                                                                                                                  Hold   Price relative to country

AngloGold Ashanti is a global gold producer with 21 operations in Africa, Australia and North and South America                              180

and a substantial, worldwide exploration program. The company's primary listing is in Johannesburg, with                                     160
secondary listings in New York, Ghana, London and Australia. We expect 2010 gold production to reach 4.5-4.7m
                                                                                                                                             140
ounces at total cash costs of around US$600/oz. Following the termination of the hedge book, we expect a
rerating as a result of higher gearing to gold. The company can now focus on bringing its portfolio of greenfield                            120

exploration projects into production to achieve its annual target of 6m ounces. Headwinds facing AngloGold                                   100

Ashanti include the need for further restructuring in South Africa, as operations like Great Noligwa and Savuka are                          80
nearing the end of their natural life.
                                                                                                                                             60
                                                                                                                                               Dec Mar      Jul    Oct Feb Jun Sep Jan Apr Aug Nov
                                                                                                                                                07 08       08     08 09 09 09 10 10        10 10

                                                                                                                                                                         Price relative to country




Strategic analysis                                                            Average SWOT company score:                            3      Production split FY11

Strengths                                                                                                                            4                            Australia                           South
                                                                                                                                                 Americas           7%                                Africa
ANG has the lowest cost base among its South African peers. The group also has a strong exploration portfolio,                                                                                        38%
                                                                                                                                                   19%
with several projects that could be brought to account within the next four to six years.
Weaknesses                                                                                                                           2
The company's production profile is likely to decrease faster than that of its peer, and greenfield exploration                                                Africa
                                                                                                                                                               36%
projects need to be brought into production.
Opportunities                                                                                                                        4      Source: Company data
Opportunities to unlock value may arise from further consolidation in the industry or through the regional
unbundling of assets.
                                                                                                                                            Market data
Threats                                                                                                                              3
                                                                                                                                            Headquarters
The main threats to the company's profitability and sustainability are continued rand strength and a weaker US$                             76 Jeppe Street, Newtown, 2001, South Africa
gold price.                                                                                                                                 Website
                                                                                                                                            www.anglogoldashanti.com
Scoring range is 1-5 (high score is good)
                                                                                                                                            Shares in issue
                                                                                                                                            381.2m
                                                                                                                                            Freefloat
                                                                                                                                            100%
                                                                                                                                            Majority shareholders
                                                                                                                                            Paulson & Co (11%), Allan Gray Unit Trust
                                                                                                                                            (10%), Blackrock (5%)


Country view: South Africa                                                                                                                  Country rel to M East & Africa

The South African economy is underpinned by its mineral wealth, but the rand's volatility tends to make investors                            150

sceptical, so most emerging market fund managers are underweight South Africa. Due to the strong commodity                                   140
sector, flows into the bond and equity markets are improving. South Africa should also benefit from the China
                                                                                                                                             130
growth theme, but we believe more stability in the rand is necessary before an upgrade to Neutral would be
warranted.                                                                                                                                   120

                                                                                                                                             110
The country view is set in consultation with the relevant company analyst but is the ultimate responsibility of the Strategy Team.
                                                                                                                                             100

                                                                                                                                             90
                                                                                                                                               Dec Mar      Jul    Oct    Feb    Jun   Sep Jan       Apr Aug Nov
                                                                                                                                                07 08       08     08     09      09   09 10         10   10 10

                                                                                                                                                                               MarketIndex




Competitive position                                                                       Average competitive score:                4-     Broker recommendations

Supplier power                                                                                                                       3-      7
The dominant positions of suppliers of steel and reagents continue to have an above-inflationary impact on                                   6
operating costs.                                                                                                                             5
Barriers to entry                                                                                                                    5+      4
                                                                                                                                             3
High capital requirements, long lead times in developing projects and increasing difficulty in finding economically
                                                                                                                                             2
viable resources present extremely high barriers to entry.
                                                                                                                                             1
Customer power                                                                                                                       3-      0
Declining production levels as reserves are depleted and mines become deeper and more mature make the South                                             Sell                    Hold                 Buy
Africa's gold mining industry a less dominant force in the supply chain.
                                                                                                                                            Source: Bloomberg
Substitute products                                                                                                                  3-
Platinum jewellery and alternative consumer products (eg i-Pods) have replaced the demand for gold jewellery,
exacerbating the impact of high prices and price volatility on demand.
Rivalry                                                                                                                              5-
Competition is fierce in a global race to replace depleted reserves. The player with the lowest operating costs and
highest cash flows has the strongest position.
Scoring range 1-5 (high score is good) Plus = getting better Minus = getting worse




AngloGold Ashanti | Strategic and Competitive Overview | 6 December 2010
                                                                                                                                                                                                               21
                                                                                                                                                                        Produced by: Nedbank Capital+
Equity | South Africa | Mining


                                 6 December 2010




                                                                                        DRDGold
                                 Hold                                                   Lacking excitement
                                 Target price
                                 R4.00
                                                                                        Over the last three months, DRDGold has experienced renewed investor interest,
                                                                                        gaining a solid 15% and outperforming all majors and the JSE gold index. This is
                                 Price
                                 R3.42                                                  in line with a general resurgence of interest in juniors during this period.
                                 Short term (0-60 days)                                 Nonetheless, we find little to get excited about with this counter.
                                 n/a
                                 Market view                                            Key forecasts
                                 Underweight
                                                                                                                                                             FY09A   FY10A   FY11F      FY12F      FY13F
                                                                                        Revenue (Rm)                                                         1,911   1,991   2,494      2,135        2,038
                                 Price performance                                      EBITDA (Rm)                                                          82.10   218.8   262.1 & 330.1 & 328.1 %
                                                                                        Reported net profit (Rm)                                             92.30   180.0    -3.40 &    -5.90 &     -6.35 &
                                                            (1M)       (3M)    (12M)
                                                                                        Normalised net profit (Rm)                                           159.1   14.30    4.80 &     -5.90 &     -6.35 &
                                 Price (R)                  3.34        3.00    4.26
                                                                                        Normalised EPS (R)                                                    0.42    0.04    0.01 &     -0.02 &     -0.02 &
                                 Absolute (%)                 2.4       14.0    -19.7
                                 Rel market (%)               0.6        1.9    -29.3   Dividend per share (R)                                                0.00    0.00    0.00       0.00         0.00
                                 Rel sector (%)              -0.8       -3.2    -23.4   Dividend yield (%)                                                    0.00    0.00    0.00       0.00         0.00
                                                                                        Normalised PE (x)                                                     8.11   91.10   274.1        n/m          n/m
                                  Dec 07          Dec 08            Dec 09
                                 12                                                     EV/EBITDA (x)                                                        12.50    5.43    4.13       2.83         2.17
                                                                                        EV/invested capital (x)                                               0.79    0.78    0.78       0.76         0.71
                                 10
                                                                                        ROIC - WACC (%)                                                       0.00    0.00    0.00       0.00         0.00
                                  8
                                                                                        Use of %& indicates that the line item has changed by at least 5%.                           year to Jun, fully diluted
                                  6                                                     Accounting standard: IFRS
                                                                                        Source: Company data, Nedbank Capital forecasts
                                  4

                                  2                                                     Blyvoor strategy needs to be rethought
                                         DRDJ.J            Jo'burg All-Share Index      Despite making a concerted effort to re-establish working places in the higher grade areas,
                                                                                        we very much doubt that this mine will operate at volumes and grades sufficient to return it to
                                 Market capitalisation
                                                                                        profitability. Unfortunately, the partial exit from Blyvoor by selling it to Aurora failed, but there
                                 R1.32bn (€144.26m)
                                                                                        are other alternatives, in our view. Unless this situation is resolved, this mine will continue to
                                 Average (12M) daily turnover
                                 R2.42m (€0.25m)                                        drag DRDGold’s profitability and rating.
                                 Sector: JSE Mining
                                 RIC: DRDJ.J, DRD SJ
                                                                                        Costs expected to increase further
                                 Priced R3.42 at close 2 Dec 2010.
                                 Source: Bloomberg
                                                                                        We believe the company’s operating costs will continue to increase, partially due to its
                                                                                        exposure to the Blyvoor underground mine. But with limited capital expenditure, replacement
                                                                                        cost margins of 10–15% are, in our view, achievable, if current rand gold prices are
                                                                                        sustained.

                                                                                        Ergo progressing
                                                                                        Over the last two quarters, the head grade has declined while the yield has increased,
                                                                                        indicating that the recovery factor is improving. Volumes are also likely to increase further.

                                                                                        Hold maintained
                                                                                        We maintain our Hold recommendation as well as our 12-month target price of R4.00 per
                                                                                        share. Revisions to our gold price and exchange rate estimates were offset by changes to
                                                                                        our production and cost assumptions. The risk to our forecast is high.
                                 Analyst
                                 Christian Siebert
                                 South Africa
                                 +27 11 295 8212
                                 Csiebert@Nedbankcapital.co.za

                                 7/F Corporate Place 135 Rivonia Road,
                                 Johannesburg, South Africa
                                                                                        Important disclosures can be found in the Disclosures Appendix.
                                                                                        +
                                                                                         Distributed outside Sub-Saharan Africa by The Royal Bank of Scotland N.V. and its affiliates under a
                                 http://research.rbsm.com                               strategic alliance with Nedbank Capital.




                                                                                                                                                                                                                  22
                              Assumptions
                              Our key assumptions are summarised in table 1. Despite high operating costs, we believe the
                              company will achieve sound replacement cost margins, assuming current rand gold price levels
                              are sustained.

                              Table 1 : Summary of key assumptions

                                                                             2007A        2008A     2009A    2010A    2011F    2012F   2013F    2014F
                              Received gold price                 US$/oz           635      812        874    1,086   1,296    1,302   1,199    1,062
                                                                  R/kg      146,551 189,237 251,176 267,799 308,710 321,189 316,144 283,488
                              Exchange rate                       US$/R        7.19         7.28      9.02     7.57     7.29    7.68    8.20     8.31
                              Gold Production                     Moz       477,156 321,432 247,689 235,729 255,351 213,721 207,241 208,473
                              Total cash costs                    US$/oz           570      675       735       954   1,151    1,042     950      921
                                                                  R/kg      132,662 158,586 212,228 227,638 269,815 257,107 250,460 245,967
                              Replacement costs (NCE)             US$/oz           743      786        873    1,061   1,256    1,114     986      942
                                                                  R/kg      150,548 178,512 258,802 253,445 294,378 274,768 259,968 251,784
                              Cash cost margins                   %            9.5%       16.2%     15.2%    13.1%    14.1%    20.0%   20.8%    13.2%
                              Replacement costs margins           %          (2.7%)        5.7%     (3.4%)     3.2%    6.2%    14.5%   17.8%    11.2%
                              Source: Company data, Nedbank Capital




                              Sensitivities
                              The starting point for our analysis is spot rates which we have rounded off to US$1,350/oz and
                              USD/ZAR7.00 in these calculations. These are entered into our models in nominal terms over the
                              life with 0% cost escalation. We then changed the gold price and the exchange rate in increments
                              of US$50/oz and USD/ZAR0.50 and calculated the impact on our target price, cash earnings and
                              to NPV. The result of this calculation may be interpreted as what the market is currently
                              discounting.

                              The sensitivity analysis of our target price indicates limited upside to current ratings.

                              Table 2 : Sensitivities to our target price

                                                    USD/oz      1,150      1,200     1,250         1,300     1,350    1,400    1,450    1,500    1,550
                              USD/ZAR                   5.00                                                                             1.84     1.78
                                                        5.50                                                  2.06     1.92     2.04     2.19     2.35
                                                        6.00                             2.08       2.12      2.29     2.48     2.67     2.87     3.06
                                                        6.50      2.22      2.28         2.49       2.71      2.95     3.17     3.40     3.62     3.83
                                                        7.00      2.61      2.88         3.15       3.42      3.68     3.93     4.18     4.43     4.67
                                                        7.50      3.27      3.57         3.88       4.17      4.46     4.75     5.03     5.30     5.57
                                                        8.00      3.98      4.32         4.66       4.98      5.30     5.62     5.93     6.24     6.54
                                                        8.50      4.75      5.12         5.49       5.85      6.20     6.55     6.90     7.24     7.58
                                                        9.00      5.56      5.97         6.37       6.77      7.16     7.54     7.93     8.30     8.68
                              Source: Nedbank Capital

                              The substantial upside to our NPV valuation confirms the huge gearing DRDGold has to a higher
                              gold price or a weaker rand.

                              Table 3 : Sensitivities to NPV

                                                    USD/oz      1,150      1,200     1,250         1,300     1,350    1,400    1,450    1,500    1,550
                              USD/ZAR                   5.00                                                                    1.38     2.84     4.21
                                                        5.50                                        0.85      2.46     4.00     5.45     6.68     8.03
                                                        6.00                1.13         2.84       4.45      6.01     7.49     8.78    10.07    11.35
                                                        6.50      2.70      4.45         6.12       7.72      9.11    10.50    11.88    13.27    14.65
                                                        7.00      5.78      7.49         9.00      10.50     11.99    13.48    14.96    16.44    17.92
                                                        7.50      8.47     10.07     11.67         13.27     14.86    16.44    18.03    19.61    21.19
                                                        8.00    10.92      12.63     14.33         16.02     17.71    19.40    21.08    22.77    24.45
                                                        8.50    13.37      15.17     16.98         18.77     20.56    22.35    24.14    25.93    27.73
                                                        9.00    15.81      17.71     19.61         21.50     23.40    25.30    27.20    29.10    30.99
                              Source: Nedbank Capital




DRDGold | Financial Statements | 6 December 2010                                                                                                        2
                                                                                                                                                    23
Income statement

Rm                                                FY09A     FY10A     FY11F     FY12F           FY13F
Revenue                                             1911      1991      2494      2135             2038
Cost of sales                                      -1682     -1651     -2151     -1737            -1642
Operating costs                                   -146.2    -120.7      -80.8     -68.2            -67.7
EBITDA                                               82.1    218.8     262.1     330.1            328.1
DDA & Impairment (ex gw)                            -46.2   -190.8    -109.8      -94.0            -90.5
EBITA                                                35.9      28.0    152.3     236.1            237.7
Goodwill (amort/impaired)                             n/a       n/a       n/a       n/a              n/a
EBIT                                                 35.9      28.0    152.3     236.1            237.7
Net interest                                       105.9       11.7     -5.00     -9.35            -1.63
Associates (pre-tax)                                  n/a       n/a       n/a       n/a              n/a
Other pre-tax items                                 -59.5    171.9      -8.20      0.00             0.00
Reported PTP                                         82.3    211.6     139.1     226.8            236.0
Taxation                                             28.4     -8.30     -45.1     -63.5            -60.2
Minority interests                                   18.4     -23.3     -97.4   -169.2           -182.1
Other post-tax items                                -36.8      0.00      0.00      0.00             0.00
Reported net profit                                  92.3    180.0      -3.40     -5.90            -6.35
Tot normalised items                                -66.8    165.7      -8.20      0.00             0.00
Normalised EBITDA                                    82.1    218.8     262.1     330.1            328.1
Normalised PTP                                     149.1       45.9    147.3     226.8            236.0
Normalised net profit                              159.1       14.3      4.80     -5.90            -6.35
Source: Company data, Nedbank Capital forecasts                                              year to Jun



Balance sheet

Rm                                                FY09A     FY10A     FY11F     FY12F           FY13F
Cash & market secs (1)                             353.6     188.2     372.9     491.3            674.9
Other current assets                               196.9     221.2     342.6     268.6            260.9
Tangible fixed assets                               1738     970.7      1119      1193               n/a
Intang assets (incl gw)                              0.00     0.00      0.00      0.00             0.00
Oth non-curr assets                                337.8     1207      1124      1074             2237
Total assets                                        2626      2588      2959      3026             3173
Short term debt (2)                                 2.10      0.00      0.00      0.00             0.00
Trade & oth current liab                           323.9     276.5     558.4     574.9            671.4
Long term debt (3)                                   65.1      59.0    139.8     109.8              69.8
Oth non-current liab                               650.7     602.1     641.9     728.3            825.2
Total liabilities                                   1042     937.6     1340      1413             1566
Total equity (incl min)                             1584      1650      1619      1614             1607
Total liab & sh equity                              2626      2588      2959      3027             3173
Net debt                                          -286.4    -129.2    -233.1    -381.5           -605.1
Source: Company data, Nedbank Capital forecasts                                           year ended Jun



Cash flow statement

Rm                                                FY09A     FY10A     FY11F     FY12F           FY13F
EBITDA                                              82.1     218.8     262.1     330.1            328.1
Change in working capital                           44.0     -26.5      9.43     -30.2            -12.6
Net interest (pd) / rec                            -10.5     -12.1     -6.70     -9.35            -1.63
Taxes paid                                         -46.9     -12.6     -39.8     -63.5            -66.1
Other oper cash items                              139.7    -114.0      60.9      38.7             37.1
Cash flow from ops (1)                             208.4      53.6     286.0     265.8            284.9
Capex (2)                                         -593.3    -226.4    -192.8    -117.4            -61.3
Disposals/(acquisitions)                            0.00      0.00      0.00      0.00             0.00
Other investing cash flow                            n/a       n/a       n/a       n/a              n/a
Cash flow from invest (3)                         -593.3    -226.4    -192.8    -117.4            -61.3
Incr / (decr) in equity                             0.00      0.00      0.00      0.00             0.00
Incr / (decr) in debt                              -85.8      7.80      91.5     -30.0            -40.0
Ordinary dividend paid                              0.00      0.00      0.00      0.00             0.00
Preferred dividends (4)                              n/a       n/a       n/a       n/a              n/a
Other financing cash flow                            n/a       n/a       n/a       n/a              n/a
Cash flow from fin (5)                             -85.8      7.80      91.5     -30.0            -40.0
Forex & disc ops (6)                               -21.8     -0.40      0.00      0.00             0.00
Inc/(decr) cash (1+3+5+6)                         -492.5    -165.4     184.7     118.4            183.6
Equity FCF (1+2+4)                                -384.9    -172.8      93.2     148.4            223.6
Source: Company data, Nedbank Capital forecasts                                              year to Jun




DRDGold | Key Financial Data | 6 December 2010
                                                                                                    24
Standard ratios                                          DRDGold                                 Great Basin Gold                         Pan African Resources

Performance                              FY09A FY10A FY11F FY12F FY13F                         FY10F FY11F FY12F                          FY11F    FY12F   FY13F
Sales growth (%)                            3.62     4.18     25.3   -14.4   -4.56              198.9    223.1         21.0                 20.5    14.2     7.15
EBITDA growth (%)                          -65.1    166.5     19.8    25.9   -0.61              -79.3      n/a         16.4                 32.4    7.77     2.20
EBIT growth (%)                            -78.4    -22.0    443.8    55.0    0.65              -64.7      n/a         10.5                 42.8    6.36     0.68
Normalised EPS growth (%)                  -65.1    -91.1    -66.8    8.75    7.67              -60.8      n/a         13.9                 55.6    7.34     2.05
EBITDA margin (%)                           4.30     11.0     10.5    15.5    16.1              -10.6     38.3         36.8                 40.2    38.0     36.2
EBIT margin (%)                             1.88     1.41     6.11    11.1    11.7              -19.3     30.2         27.6                 38.0    35.4     33.2
Net profit margin (%)                       8.33     0.72     0.19   -0.28   -0.31              -19.2     24.3         22.9                 28.8    27.0     25.8
Return on avg assets (%)                    4.14     1.12     3.82    5.68    5.71              -3.22     11.4         11.1                 23.0    19.0     15.7
Return on avg equity (%)                    11.0     0.88     0.29   -0.37   -0.39              -5.27     18.7         17.7                 28.9    23.9     19.7
ROIC (%)                                    4.14     1.55     7.21    12.3    13.9              -3.60     12.0         11.4                 38.7    36.6     34.6
ROIC - WACC (%)                             0.00     0.00     0.00    0.00    0.00               0.00     0.00         0.00                 0.00    0.00     0.00
                                                                        year to Jun                              year to Dec                            year to Jun

Valuation
EV/sales (x)                                0.54     0.60     0.43   0.44    0.35                11.4     3.58         2.78                 1.21    0.84     0.54
EV/EBITDA (x)                               12.5     5.43     4.13   2.83    2.17                 n/m     9.37         7.55                 3.02    2.22     1.48
EV/EBITDA @ tgt price (x)                   15.3     6.45     4.98   3.51    2.85                 n/m     10.1         8.17                 4.26    3.37     2.61
EV/EBIT (x)                                 28.7     42.4     7.11   3.96    2.99                 n/m     11.9         10.1                 3.20    2.38     1.61
EV/invested capital (x)                     0.79     0.78     0.78   0.76    0.71                1.95     1.71         1.56                 1.53    1.14     0.77
Price/book value (x)                        0.82     0.80     0.81   0.82    0.82                2.86     2.37         1.99                 1.37    1.08     0.89
Equity FCF yield (%)                       -29.8    -13.3     7.08   11.3    17.0               -19.1    -1.49         6.59                 10.7    16.3     19.7
Normalised PE (x)                           8.11     91.1    274.1    n/m     n/m                 n/m     13.9         12.2                 5.41    5.04     4.94
Norm PE @ tgt price (x)                     9.48    106.6    320.6    n/m     n/m                 n/m     15.2         13.4                 7.15    6.66     6.53
Dividend yield (%)                          0.00     0.00     0.00   0.00    0.00                0.00     0.00         0.00                 0.00    0.00     0.00
                                                                        year to Jun                              year to Dec                            year to Jun

Per share data                           FY09A FY10A FY11F FY12F FY13F                Solvency                                 FY09A FY10A FY11F FY12F FY13F
Tot adj dil sh, ave (m)                   377.2 381.2 384.9 384.9 384.9               Net debt to equity (%)                    -18.1 -7.83 -14.4 -23.6 -37.7
Reported EPS (ZAR)                         0.24  0.47 -0.01 -0.02 -0.02               Net debt to tot ass (%)                   -10.9 -4.99 -7.88 -12.6 -19.1
Normalised EPS (ZAR)                       0.42  0.04  0.01 -0.02 -0.02               Net debt to EBITDA                        -3.49 -0.59 -0.89 -1.16 -1.84
Dividend per share (ZAR)                   0.00  0.00  0.00  0.00  0.00               Current ratio (x)                          1.69  1.48  1.28  1.32  1.39
Equity FCF per share (ZAR)                -1.02 -0.45  0.24  0.39  0.58               Operating CF int cov (x)                   25.3  6.47  49.6  36.2 216.5
Book value per sh (ZAR)                    4.19  4.29  4.21  4.19  4.17               Dividend cover (x)                         0.00  0.00  0.00  0.00  0.00
                                                                        year to Jun                                                                     year to Jun

Priced as follows: DRDJ.J - R3.42; GBGJ.J - R20.09; PANJ.J - R1.09
Source: Company data, Nedbank Capital forecasts




Valuation methodology
Our 12-month target price is based on an equally weighted average of five valuation metrics: price to NPV, price to book,
EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple but reserve the
right to make adjustments depending on where the company is in its life cycle and to bring multiples in line with industry averages.
Both up- and downside risks to our valuation include variations to our currency, gold price, production and cost assumptions.
Source: Nedbank Capital




DRDGold | Performance and Valuation | 6 December 2010
                                                                                                                                                               25
Company description                                                                                                                  Hold   Price relative to country

DRDGold is a junior gold producer with a primary listing on the JSE (Johannesburg) and a secondary listing on                                300

Nasdaq (New York). The company's main business is the retreatment of surface tailings and it also operates the
                                                                                                                                             250
Blyvooruitzicht deep level mine. After the sale of 60% of Blyvoor to Aurora failed, the company is focussed on
increasing production volumes from this operation. DRDGold is also developing a 50km pipeline to deposit tailings                            200

from the Crown operations at the Ergo tailings facilities.
                                                                                                                                             150


                                                                                                                                             100


                                                                                                                                             50
                                                                                                                                               Dec Mar      Jul   Oct    Feb Jun Sep Jan            Apr Aug Nov
                                                                                                                                                07 08       08    08      09  09  09  10            10  10  10

                                                                                                                                                                        Price relative to country




Strategic analysis                                                            Average SWOT company score:                            3      Production split, FY11F

Strengths                                                                                                                            4           Under
                                                                                                                                                 ground
The retreatment of surface tailings carries none of the operational risk usually associated with South African deep                               36%

level mining.
Weaknesses                                                                                                                           1
                                                                                                                                                                                                          Surface
The low grades of DRDGold's tailings make operating margins very sensitive to the rand gold price.                                                                                                        sources
                                                                                                                                                                                                           64%
Opportunities                                                                                                                        3
Opportunities to unlock value may arise from expansion offshore to reduce currency risk.                                                    Source: Nedbank Capital forecasts
Threats                                                                                                                              3
The main threats to the company's profitability and sustainability are continued rand strength and a weaker dollar                          Market data
gold price.
                                                                                                                                            Headquarters
Scoring range is 1-5 (high score is good)                                                                                                   1st floor, Quadrum 1, Quadrum Office Park, 50
                                                                                                                                            Constantia Boulevard, Constantia Kloof Ext.,
                                                                                                                                            Roodepoort, South Africa
                                                                                                                                            Website
                                                                                                                                            www.drdgold.com
                                                                                                                                            Shares in issue
                                                                                                                                            384.9m
                                                                                                                                            Freefloat
                                                                                                                                            100%
                                                                                                                                            Majority shareholders
                                                                                                                                            Soges Fiducem (8%), Investec (8%),
                                                                                                                                            Clearstream Banking (2%)

Country view: South Africa                                                                                                                  Country rel to M East & Africa

The South African economy is underpinned by its mineral wealth, but the rand's volatility tends to make investors                            150

sceptical, so most emerging market fund managers are underweight South Africa. Due to the strong commodity                                   140
sector, flows into the bond and equity markets are improving. South Africa should also benefit from the China
                                                                                                                                             130
growth theme, but we believe more stability in the rand is necessary before an upgrade to Neutral would be
                                                                                                                                             120
warranted.
                                                                                                                                             110
The country view is set in consultation with the relevant company analyst but is the ultimate responsibility of the Strategy Team.
                                                                                                                                             100


                                                                                                                                             90
                                                                                                                                               Dec Mar      Jul   Oct    Feb    Jun   Sep    Jan    Apr    Aug Nov
                                                                                                                                                07 08       08    08      09     09    09     10    10     10  10

                                                                                                                                                                             MarketIndex




Competitive position                                                                       Average competitive score:                4-     Broker recommendations

Supplier power                                                                                                                       3-      3
Dominant positions of suppliers of steel and reagents continue to have an above inflationary impact on operating
costs.
                                                                                                                                             2
Barriers to entry                                                                                                                    5+
High capital requirements, long lead times in developing projects and increasing difficulty in finding economically                          1
viable resources present extremely high barriers to entry.
Customer power                                                                                                                       3-      0
Declining production levels as reserves are depleted and mines become deeper and more mature make the South                                               Sell                 Hold                  Buy
African gold mining industry a less dominant force in the supply chain.
                                                                                                                                            Source: Bloomberg
Substitute products                                                                                                                  3-
Platinum jewellery and alternative consumer products (eg, i-Pods) have replaced the demand for gold jewellery,
exacerbating the impact of high prices and price volatility on demand.
Rivalry                                                                                                                              5-
Competition is fierce in a global race to replace depleted reserves where the player with the lowest operating costs
and highest cash flows has the strongest position.
Scoring range 1-5 (high score is good) Plus = getting better Minus = getting worse




DRDGold | Strategic and Competitive Overview | 6 December 2010
                                                                                                                                                                                                               26
Equity | South Africa | Mining


                                 6 December 2010                                                                                                                              Produced by: Nedbank Capital




                                 Change of recommendation
                                                                                           Gold Fields
                                 Sell (from Hold)                                          Taking profits
                                 Target price
                                 R121.00 (from R130.00)
                                                                                           While some may fail to get excited about this company, it is the best performing
                                                                                           South African gold share. Even after AngloGold Ashanti terminated its hedge
                                 Price
                                 R120.99                                                   book it was outperformed by Gold Fields. Nonetheless, lately the stock has failed
                                 Short term (0-60 days)                                    to maintain levels above the R120 mark and we find it opportune to take profits.
                                 n/a
                                 Market view                                               Key forecasts
                                 Underweight
                                                                                                                                                                FY08A    FY09A    FY10F      FY11F       FY12F
                                                                                           Revenue (Rm)                                                         25,360   31,772   33,808     37,178      36,993
                                 Price performance                                         EBITDA (Rm)                                                           9,004   12,647   13,267     16,344      14,984 %
                                                                                           Reported net profit (Rm)                                              2,613    3,429    3,162 & 5,838           5,163 %
                                                             (1M)      (3M)    (12M)
                                                                                           Normalised net profit (Rm)                                            2,640    3,786    3,422 & 5,838           5,163 %
                                 Price (R)                 107.9      104.1    114.7
                                                                                           Normalised EPS (R)                                                     4.04     5.37     4.85 &     8.27         7.31 %
                                 Absolute (%)                13.0      17.3          6.3
                                 Rel market (%)              11.0        4.4     -7.4      Dividend per share (R)                                                186.8    130.0    189.5 % 319.7 % 276.4 %
                                 Rel sector (%)               8.1       -1.2     -0.2      Dividend yield (%)                                                    154.4    107.4    156.7      264.2        228.4
                                                                                           Normalised PE (x)                                                     29.90    22.50    25.00      14.60        16.50
                                   Dec 07         Dec 08            Dec 09
                                 140                                                       EV/EBITDA (x)                                                         10.50     7.28     6.77       5.30         5.56
                                                                                           EV/invested capital (x)                                                1.80     1.79     1.79       1.71         1.65
                                 120
                                                                                           ROIC - WACC (%)                                                        0.00     0.00     0.00       0.00         0.00
                                 100
                                                                                           Use of %& indicates that the line item has changed by at least 5%.                              year to Dec, fully diluted
                                  80                                                       Accounting standard: IFRS
                                                                                           Source: Company data, Nedbank Capital forecasts
                                  60

                                  40                                                       Scope for restructuring
                                         GFIF.J            Jo'burg All-Share Index         The reorganisation of Gold Field’s core South African assets – Driefontein and Kloof – may
                                                                                           have been done under the mantle of better cost control, but it does open the door for more
                                 Market capitalisation
                                                                                           drastic restructuring. Some of the new individual clusters may prove to be unprofitable and,
                                 R85.41bn (€9.43bn)
                                                                                           so, be closed down or even sold. This would put Gold Fields under even greater pressure to
                                 Average (12M) daily turnover
                                 R236.21m (€24.04m)                                        bring one of its exploration projects to account to compensate for the loss in production.
                                 Sector: JSE Mining
                                 RIC: GFIF.J, GFI SJ
                                                                                           Development of South Deep at opportune time
                                 Priced R120.99 at close 2 Dec 2010.
                                 Source: Bloomberg
                                                                                           While the remaining estimated R8bn of capital expenditure for the development of this
                                                                                           project will consume much of the group’s cash flow over the next three years, the elevated
                                                                                           gold price certainly helps in funding this investment in Gold Fields’ sustainable future.
                                                                                           However, we find some of the group’s cost and production projections too optimistic and take
                                                                                           a more cautious stance in our valuations.

                                                                                           Fundamentals remain solid
                                                                                           By reducing its South African labour force, largely through natural attrition, the company has
                                                                                           made sound progress in reducing its operating costs. We still see scope for further
                                                                                           reductions, but we believe management has made an important first step. Also the lack of
                                                                                           mining flexibility, an industry wide problem, in our view, is being addressed and further
                                                                                           improvements in managing the mining mix (grade) are likely.

                                 Analyst                                                   Downgrading to Sell
                                                                                           We downgrade Gold Fields from Hold to Sell and reduce our target price to R121 (R130) due
                                 Christian Siebert
                                 South Africa                                              to revisions to our gold price, exchange rate, production and cost assumptions.
                                 +27 11 295 8212
                                 Csiebert@Nedbankcapital.co.za

                                 7/F Corporate Place 135 Rivonia Road,
                                 Johannesburg, South Africa

                                 http://research.rbsm.com                                  Important disclosures can be found in the Disclosures Appendix.




                                                                                                                                                                                                                        27
                                Assumptions
                                Our key assumptions are summarised below. Gold Fields urgently needs to develop one of its
                                exploration projects to account to compensate for further declining production at its mainstay
                                South African operations – Driefontein, Kloof and Beatrix. Replacement cost margins look solid,
                                but remain well below those of AngloGold Ashanti due to high capital expenditure for South Deep.

                                Table 1 : Summary of our assumptions

                                                                               2007A     2008A     2009A     2010A     2011F     2012F      2013F     2014F
                                Received gold price             US$/oz            612       708       872       996     1,310     1,350     1,250     1,150
                                                                R/kg          133,352 160,381 228,414 267,541 309,884 325,038 319,962 305,025
                                Exchange rate                   US$/R            6.76      7.04      8.25      8.40      7.37      7.49      7.96      8.25
                                Gold Production                 Moz          4,066,131 3,983,174 3,329,176 3,582,594 3,505,072 3,677,440 3,717,147 3,746,409
                                Total cash costs                US$/oz            367       435       536       596       758       713       706       708
                                                                R/kg           80,305    98,492 141,911 159,749 179,572 171,694 180,800 187,685
                                Replacement costs (NCE)         US$/oz            488       636       850       848     1,097     1,014       968       928
                                                                R/kg          107,198 144,026 224,168 227,857 259,683 244,072 247,730 246,225
                                Cash cost margins               %              39.8%     38.6%     37.7%     40.4%     42.1%     47.2%      43.5%     38.5%
                                Replacement costs margins %                    21.1%     11.9%      3.2%     17.0%     18.3%     27.9%      25.3%     21.7%
                                Source: Company data, Nedbank Capital




                                Sensitivities
                                The starting point for our analysis is spot rates, which, in these calculations, we have rounded off
                                to US$1,350/oz and USD/ZAR7.00. These are entered into our models in nominal terms over the
                                life with 0% cost escalation. We then change the gold price and the exchange rate in increments
                                of US$50/oz and USD/ZAR0.50 and calculate the impact on our target price, cash earnings and to
                                NPV. The result of this calculation may be interpreted as what the market is currently discounting.

                                At spot rates Gold Fields appears to be fairly priced

                                Table 2 : Sensitivities to our target price

                                                     USD/oz      1,150        1,200      1,250     1,300     1,350      1,400     1,450      1,500     1,550
                                USD/ZAR           5.00              91           65         66        68         71        73        76         79        82
                                                  5.50              70           72         75        78         81        84        87         90        94
                                                  6.00              78           81         84        88         91        95        98        102       105
                                                  6.50              86           90         94        98       102        105       109        113       117
                                                  7.00              96          100        104       108       112        116       121        125       129
                                                  7.50              105         109        114       118       123        127       132        136       141
                                                  8.00              114         119        124       128       133        138       143        148       153
                                                  8.50              123         128        134       139       144        149       154        159       165
                                                  9.00              133         138        144       149       154        160       165        171       176
                                Source: Nedbank Capital


                                At spot gold and rand rates Gold Fields is trading at a 26% discount to its NPV.

                                Table 3 : Sensitivities to NPV

                                                     USD/oz      1,150         1,200     1,250      1,300     1,350      1,400     1,450      1,500     1,550
                                USD/ZAR           5.00                  6         22        35         47        60         72         84        96       107
                                                  5.50                  32        45        59         72        86         98       111        123       136
                                                  6.00                  53        68        82         96       110        124       137        150       163
                                                  6.50                  74        89       105        119       134        148       162        177       191
                                                  7.00                  95       111       126        142       157        173       188        204       219
                                                  7.50              114          131       147        164       181        197       214        230       247
                                                  8.00              133          151       169        186       204        222       239        257       275
                                                  8.50              152          171       190        209       227        246       265        284       303
                                                  9.00              171          191       211        231       251        271       291        310       330
                                Source: Nedbank Capital




Gold Fields | Financial Statements | 6 December 2010                                                                                                           2
                                                                                                                                                           28
Income statement

Rm                                                   FY08A      FY09A      FY10F      FY11F             FY12F
Revenue                                               25360      31772      33808      37178            36993
Cost of sales                                        -15713     -18322     -19613     -19731           -20988
Operating costs                                       -642.8     -803.1     -927.4      -1104            -1020
EBITDA                                                  9004     12647      13267      16344            14984
DDA & Impairment (ex gw)                               -3646      -4400      -5234      -5286            -5339
EBITA                                                   5358       8247       8033     11058              9645
Goodwill (amort/impaired)                                 n/a        n/a        n/a        n/a              n/a
EBIT                                                    5358       8247       8033     11058              9645
Net interest                                          -410.5     -406.5     -417.9     -931.9           -690.4
Associates (pre-tax)                                      n/a        n/a        n/a        n/a              n/a
Other pre-tax items                                     -59.2    -799.0     -702.6       0.00             0.00
Reported PTP                                            4888       7042       6913     10126              8954
Taxation                                               -1983      -3070      -2779      -2430            -2149
Minority interests                                    -292.0     -542.8     -971.8      -1858            -1643
Other post-tax items                                     0.00      0.00       0.00       0.00             0.00
Reported net profit                                     2613       3429       3162       5838             5163
Tot normalised items                                    -27.0    -356.7     -260.1        0.00             0.00
Normalised EBITDA                                       9004     12647      13267      16344            14984
Normalised PTP                                          4915       7399       7173     10126              8954
Normalised net profit                                   2640       3786       3422       5838             5163
Source: Company data, Nedbank Capital forecasts                                                     year to Dec



Balance sheet

Rm                                                   FY08A      FY09A      FY10F      FY11F             FY12F
Cash & market secs (1)                                 1054      1828       4641       6729              8777
Other current assets                                  6141       5774       4557       7992             11379
Tangible fixed assets                                49601      51648      52011      48942             45605
Intang assets (incl gw)                               4459       4459       4459       4459              4459
Oth non-curr assets                                   5148       2568       1914       1914              1914
Total assets                                         66402      66276      67583      70036             72134
Short term debt (2)                                   391.9      3674       4750       4750              4750
Trade & oth current liab                              4683       4129       1026       1116              1153
Long term debt (3)                                   10016       4823       4340       3140              1940
Oth non-current liab                                  8029       8926      11673      11655             11703
Total liabilities                                    23120      21551      21788      20660             19546
Total equity (incl min)                              43282      44725      45795      49376             52588
Total liab & sh equity                               66402      66276      67583      70036             72134
Net debt                                              9354       6669       4448       1160             -2088
Source: Company data, Nedbank Capital forecasts                                                  year ended Dec



Cash flow statement

Rm                                                   FY08A      FY09A      FY10F      FY11F             FY12F
EBITDA                                                 9004     12647      13267      16344             14984
Change in working capital                             210.5      -1793       1184        32.5              34.9
Net interest (pd) / rec                                0.00        0.00    -270.2     -931.9            -690.4
Taxes paid                                            -1478      -1596      -2078      -2430             -2149
Other oper cash items                                -374.7     -661.0     -332.1     -294.4            -262.8
Cash flow from ops (1)                                 7362       8597     11771      12720             11917
Capex (2)                                             -8757      -7170      -8038      -7175             -6718
Disposals/(acquisitions)                               3.50        3.50       3.50      3.50              3.50
Other investing cash flow                                n/a        n/a        n/a        n/a               n/a
Cash flow from invest (3)                             -8753      -7166      -8034      -7171             -6714
Incr / (decr) in equity                               831.7      122.6        34.7       0.00              0.00
Incr / (decr) in debt                                  2316     -289.4      766.0      -1200             -1200
Ordinary dividend paid                                -1210     -760.3      -1866      -2257             -1951
Preferred dividends (4)                                  n/a        n/a        n/a        n/a               n/a
Other financing cash flow                                n/a        n/a        n/a        n/a               n/a
Cash flow from fin (5)                                 1938     -927.1      -1066      -3457             -3151
Forex & disc ops (6)                                  266.1       -77.5    -204.6        0.00              0.00
Inc/(decr) cash (1+3+5+6)                             812.7      426.1       2467       2092              2051
Equity FCF (1+2+4)                                    -1395       1427       3734       5545              5199
Source: Company data, Nedbank Capital forecasts                                                     year to Dec




Gold Fields | Key Financial Data | 6 December 2010
                                                                                                           29
Standard ratios                                        Gold Fields                                  AngloGold Ashanti                           Harmony Gold

Performance                              FY08A FY09A FY10F FY11F FY12F                            FY10F FY11F FY12F                          FY11F    FY12F   FY13F
Sales growth (%)                            22.8    25.3      6.41       9.97   -0.50               27.4     18.8        -2.46                19.8     20.9     6.65
EBITDA growth (%)                           25.7    40.5      4.90       23.2   -8.32              -5.54     36.4        -10.8                93.9     52.9     5.03
EBIT growth (%)                             32.5    53.9     -2.60       37.7   -12.8              -12.6     55.5        -16.6               729.4    106.5     3.65
Normalised EPS growth (%)                   47.3    32.9     -9.77       70.6   -11.6              -27.4     17.2        -10.4                 n/a    156.1     6.28
EBITDA margin (%)                           35.5    39.8      39.2       44.0    40.5               37.6     43.2         39.5                21.7     27.5     27.1
EBIT margin (%)                             21.1    26.0      23.8       29.7    26.1               24.5     32.0         27.4                8.59     14.7     14.3
Net profit margin (%)                       10.4    11.9      10.1       15.7    14.0               18.0     18.4         16.9                4.14     8.76     8.73
Return on avg assets (%)                    5.37    6.97      7.01       12.2    10.3               11.5     17.0         15.0                1.83     4.01     3.99
Return on avg equity (%)                    6.51    8.60      7.56       12.3    10.1               27.9     27.2         20.2                1.89     4.69     4.77
ROIC (%)                                    8.98    11.3      11.3       15.8    13.7               24.0     30.0         26.0                2.82     5.67     5.82
ROIC - WACC (%)                             0.00    0.00      0.00       0.00    0.00               0.00     0.00         0.00                0.00     0.00     0.00
                                                                           year to Dec                              year to Dec                           year to Jun

Valuation
EV/sales (x)                               3.74     2.90     2.66     2.33       2.25               3.48     2.75        2.63                  2.58    2.07     1.84
EV/EBITDA (x)                              10.5     7.28     6.77     5.30       5.56               9.24     6.37        6.67                  11.9    7.53     6.81
EV/EBITDA @ tgt price (x)                  10.5     7.28     6.77     5.30       5.56               9.84     6.81        7.16                  13.9    8.86     8.08
EV/EBIT (x)                                17.7     11.2     11.2     7.83       8.64               14.2     8.59        9.61                  30.0    14.1     12.9
EV/invested capital (x)                    1.80     1.79     1.79     1.71       1.65               3.81     3.71        3.71                  1.14    1.10     1.06
Price/book value (x)                       1.83     1.91     1.86     1.73       1.62               4.62     3.71        3.16                  1.15    1.10     1.05
Equity FCF yield (%)                      -1.77     1.67     4.37     6.49       6.09              -4.69     7.58        7.66                 -0.52    3.40     5.35
Normalised PE (x)                          29.9     22.5     25.0     14.6       16.5               17.7     15.1        16.9                  61.4    24.0     22.6
Norm PE @ tgt price (x)                    29.9     22.5     25.0     14.6       16.5               18.9     16.2        18.0                  72.1    28.2     26.5
Dividend yield (%)                        154.4    107.4    156.7    264.2      228.4               39.9    130.4       116.7                  28.7    41.7     44.3
                                                                           year to Dec                              year to Dec                           year to Jun

Per share data                           FY08A FY09A FY10F FY11F FY12F                   Solvency                                 FY08A FY09A FY10F FY11F FY12F
Tot adj dil sh, ave (m)                   653.0 704.6 705.8 705.9 705.9                  Net debt to equity (%)                     21.6  14.9  9.71  2.35 -3.97
Reported EPS (ZAR)                         4.00  4.87  4.48  8.27  7.31                  Net debt to tot ass (%)                    14.1  10.1  6.58  1.66 -2.89
Normalised EPS (ZAR)                       4.04  5.37  4.85  8.27  7.31                  Net debt to EBITDA                         1.04  0.53  0.34  0.07 -0.14
Dividend per share (ZAR)                  186.8 130.0 189.5 319.7 276.4                  Current ratio (x)                          1.42  0.97  1.59  2.51  3.41
Equity FCF per share (ZAR)                -2.14  2.03  5.29  7.86  7.36                  Operating CF int cov (x)                   0.00  0.00  52.3  17.3  21.4
Book value per sh (ZAR)                    66.3  63.4  64.9  69.9  74.5                  Dividend cover (x)                         3.27  3.40  2.84  2.59  2.65
                                                                           year to Dec                                                                    year to Dec

Priced as follows: GFIF.J - R120.99; ANGJ J – R336.99; HARJ.J – R80.00
Source: Company data, Nedbank Capital forecasts




Valuation methodology
Our 12-month target price is based on an equally weighted average of five valuation metrics: price to NPV, price to book,
EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple but reserve the
right to make adjustments depending on where the company is in its life cycle and to bring multiples in line with industry averages.
Upside and downside risks to our valuation include variations to our currency, gold price, production and cost assumptions.
Source: Nedbank Capital




Gold Fields | Performance and Valuation | 6 December 2010
                                                                                                                                                                 30
Company description                                                                                                                  Sell   Price relative to country

Gold Fields is one of the world's largest unhedged producers of gold with production levels of 3.4-3.8 million                               180

ounces per annum from nine operations in South Africa, Ghana, Australia and Peru. The company is                                             160
headquartered in Johannesburg, South Africa, and primarily trades on the JSE with a secondary listing in New
                                                                                                                                             140
York. The group's flagship project is the South Deep mine with an expected life of around 40 years and targeted
annual production levels of 700-800 thousand ounces. Given the high amount of capital expenditure needed to                                  120

bring this project to account, this operation has been somewhat contentious with investors.                                                  100


                                                                                                                                             80

                                                                                                                                             60
                                                                                                                                               Dec Mar         Jul     Oct Feb Jun Sep Jan Apr Aug Nov
                                                                                                                                                07 08          08      08 09 09 09 10 10        10 10

                                                                                                                                                                             Price relative to country




Strategic analysis                                                            Average SWOT company score:                            3      Production split FY11

Strengths                                                                                                                            4                     Australia
Thanks to Gold Field's long-life South Deep project in South Africa the group has the longest 'life of mine' in the                               South     16%
                                                                                                                                                 America
industry giving it a solid cash generating platform.                                                                                               8%


Weaknesses                                                                                                                           2                                                                     South Africa
                                                                                                                                                    Ghana                                                     58%
Gold Field's deep-level South African operations are prone to seismic related safety stoppages making production                                     18%

results extremely unpredicatable.
Opportunities                                                                                                                        3      Source: Company data
Opportunities to unlock value may arise from further consolidation in the industry or through the regional
unbundling of assets.
                                                                                                                                            Market data
Threats                                                                                                                              3
                                                                                                                                            Headquarters
The main threats to the company's profitability and sustainability are continued rand strength and a weaker dollar                          150 Helen Rd, Sandown, Sandton, 2196, South
gold price.                                                                                                                                 Africa
                                                                                                                                            Website
Scoring range is 1-5 (high score is good)
                                                                                                                                            www.goldfields.co.za
                                                                                                                                            Shares in issue
                                                                                                                                            705.9m
                                                                                                                                            Freefloat
                                                                                                                                            100%
                                                                                                                                            Majority shareholders
                                                                                                                                            Tradewinds Global (6%), First Eagle
                                                                                                                                            Investment (6%), Mvelphanda Resources (5%)

Country view: South Africa                                                                                                                  Country rel to M East & Africa

The South African economy is underpinned by its mineral wealth, but the rand's volatility tends to make investors                            150

sceptical, so most emerging market fund managers are underweight South Africa. Due to the strong commodity                                   140
sector, flows into the bond and equity markets are improving. South Africa should also benefit from the China
                                                                                                                                             130
growth theme, but we believe more stability in the rand is necessary before an upgrade to Neutral would be
warranted.                                                                                                                                   120

                                                                                                                                             110
The country view is set in consultation with the relevant company analyst but is the ultimate responsibility of the Strategy Team.
                                                                                                                                             100

                                                                                                                                             90
                                                                                                                                               Dec Mar         Jul     Oct    Feb    Jun   Sep Jan       Apr Aug Nov
                                                                                                                                                07 08          08      08     09      09   09 10         10   10 10

                                                                                                                                                                                   MarketIndex




Competitive position                                                                       Average competitive score:                4-     Broker recommendations

Supplier power                                                                                                                       3-      8
Dominant positions of suppliers of steel and reagents continue to have an above inflationary impact on operating                             7
costs.                                                                                                                                       6
                                                                                                                                             5
Barriers to entry                                                                                                                    5+      4
High capital requirements, long lead times in developing projects and increasing difficulty in finding economically                          3
viable resources present extremely high barriers to entry.                                                                                   2
                                                                                                                                             1
Customer power                                                                                                                       3-      0
Declining production levels as reserves are depleted and mines become deeper and more mature make the South                                                 Sell                    Hold                 Buy
African gold mining industry a less dominant force in the supply chain.
                                                                                                                                            Source: Bloomberg
Substitute products                                                                                                                  3-
Platinum jewellery and alternative consumer products (eg, i-Pods) have replaced the demand for gold jewellery
exacerbating the impact of high prices and price volatility on demand.
Rivalry                                                                                                                              5-
Competition is fierce in a global race to replace depleted reserves where the player with the lowest operating costs
and highest cash flows has the strongest position.
Scoring range 1-5 (high score is good) Plus = getting better Minus = getting worse




Gold Fields | Strategic and Competitive Overview | 6 December 2010
                                                                                                                                                                                                                 31
Equity | South Africa | Mining


                                 6 December 2010                                                                                                             Produced by: Nedbank Capital




                                 Change of recommendation
                                                                                       Great Basin Gold
                                 Sell (from Hold)                                      Time to take a breather
                                 Target price
                                 R22.00
                                                                                       Great Basin Gold's share price has had a great year gaining 88% over the last 12
                                                                                       months, 38% in the last three months and 7% in the last week. Aside from the
                                 Price
                                 R20.00                                                usual risks associated with any start-up project we see no major reason for
                                 Short term (0-60 days)                                concern. Nonetheless we believe it is opportune to lock in some profits.
                                 n/a
                                 Market view                                           Key forecasts
                                 Underweight
                                                                                                                                            FY08A     FY09A      FY10F      FY11F       FY12F
                                                                                       Revenue (Rm)                                          198.8       252.7   755.4       2,441        2,952
                                 Price performance                                     EBITDA (Rm)                                            -754        -388    -80.2      934.1        1,087
                                                                                       Reported net profit (Rm)                               -645        -432    -66.6      593.9        676.3
                                                            (1M)      (3M)     (12M)
                                                                                       Normalised net profit (Rm)                             -638        -342    -145       593.9        676.3
                                 Price (R)                 19.50     15.10     12.60
                                                                                       Normalised EPS (R)                                     -3.05      -1.03    -0.40       1.45         1.65
                                 Absolute (%)                 2.8     32.7      59.0
                                 Rel market (%)               0.9     18.2      38.5
                                                                                       Dividend per share (R)                                  0.00       0.00    0.00        0.00         0.00
                                 Rel sector (%)              -1.7     11.9      49.2   Dividend yield (%)                                     0.00        0.00    0.00        0.00         0.00
                                                                                       Normalised PE (x)                                       n/m        n/m      n/m       13.90        12.20
                                  Dec 07          Dec 08         Dec 09
                                 32                                                    EV/EBITDA (x)                                           n/m        n/m      n/m        9.37         7.55
                                                                                       EV/invested capital (x)                                3.29        2.53    1.95        1.71         1.56
                                 28
                                                                                       ROIC - WACC (%)                                        0.00        0.00    0.00        0.00         0.00
                                 24

                                 20
                                                                                       Accounting standard: IFRS                                                          year to Dec, fully diluted
                                                                                       Source: Company data, Nedbank Capital forecasts
                                 16

                                 12                                                    Project delivery is progressing, but behind schedule
                                  8
                                                                                       The building blocks for becoming a fully-fledged producer are falling into place, even if they
                                         GBGJ.J            Jo'burg All-Share Index
                                                                                       are a little late. At Burnstone the commissioning of the plant has been delayed by exogenous
                                                                                       factors (Eskom), but the power supply is now sufficient for the planned production build-up.
                                 Market capitalisation
                                 R7.10bn (€783.19m)                                    Pleasingly, all third-party milling campaigns at Hollister have come to an end and all ore will
                                 Average (12M) daily turnover                          be processed at the Esmeralda plant, hopefully making production results more stable and
                                 R2.05m (€0.21m)                                       predictable.
                                 Sector: JSE Mining
                                 RIC: GBGJ.J, GBG SJ                                   High forecasting risk until operations run at full capacity
                                 Priced R20.00 at close 2 Dec 2010.
                                 Source: Bloomberg                                     As with any start-up project, the risk to any production forecast is high. Particularly at
                                                                                       Burnstone, where the success of long-hole stoping is, in our view, critical in achieving yield,
                                                                                       volume and cost targets. Here, shale in the footwall will make controlling the stoping width
                                                                                       and hence minimising dilution challenging. Also, the milling arrangements at Hollister seem
                                                                                       to us anything but optimal.

                                                                                       Funding risk remains
                                                                                       With a cash balance of US$23m, plus US$90m from the exercising of 57.4m warrants and
                                                                                       capital commitments of US$120m-150m over the next two years to complete its projects, we
                                                                                       believe there is still some funding risk. Headroom on existing debt facilities is limited, but
                                                                                       management expects to be cash flow positive in 4Q10.

                                                                                       Downgrading to Sell
                                 Analyst                                               We downgrade Great Basin Gold to Sell (Hold) but maintain our 12-month target price of R22
                                 Christian Siebert                                     per share. Revisions to our gold price and exchange rate forecast were offset by changes to
                                 South Africa                                          our production and cost assumptions. The risk to our forecast is high.
                                 +27 11 295 8212
                                 Csiebert@Nedbankcapital.co.za

                                 7/F Corporate Place 135 Rivonia Road,
                                 Johannesburg, South Africa

                                 http://research.rbsm.com                              Important disclosures can be found in the Disclosures Appendix.




                                                                                                                                                                                                       32
                               Assumptions
                               The table below summarises the key assumptions in our valuation of Great Basin Gold. The next
                               12 months will be make or break for Great Basin Gold as they will have to deliver on their
                               production targets.

                                Table 1 : Summary of our key assumptions

                                                                                  2008E         2009E        2010F            2011F        2012F      2013F      2014F
                                Received gold price                 US$/oz             808           873         1,090        1,097        1,029        868        889
                                                                    R/kg        216,333        243,171      271,390      298,917       286,858       251,655    268,264
                                Exchange rate                       US$/R           8.25             8.40         7.63         8.48         8.68        9.02       9.38
                                Gold Production                     Moz          36,600         83,392      111,631      262,536       330,906       363,941    363,576
                                Total cash costs                    US$/oz             494            94          725           571          554        564        580
                                                                    R/kg        129,167         25,498      179,402      155,557       154,457       163,594    174,891
                                Replacement costs (NCE)             US$/oz        4,002          1,946           2,973        1,242          940        877        890
                                                                    R/kg       1,011,437       498,926      726,588      338,346       262,133       254,485    268,593
                                Cash cost margins                   %             40.3%         86.1%        26.5%            48.0%        46.2%      35.0%      34.8%
                                Replacement costs margins %                    (238.3%) (109.9%) (173.3%)                     1.8%         23.6%      13.9%      14.9%
                                Source: Company data, Nedbank Capital estimates and forecasts




                               Sensitivities
                               The starting point for our analysis is spot rates which in these calculations we have rounded off to
                               US$1,350/oz and USD/ZAR7.00. These are entered into our models in nominal terms over the life
                               with 0% cost escalation. We then change the gold price and the exchange rate in increments of
                               US$50/oz and USD/ZAR0.50 and calculate the impact on our target price, cash earnings and to
                               NPV. The result of this calculation may be interpreted as what the market is currently discounting.

                               Applying spot rates to our valuation methodology implies 30% upside to current ratings.

                                Table 2 : Sensitivities to our target price

                                                   USD/oz           1,150      1,200         1,250      1,300       1,350       1,400        1,450      1,500     1,550
                                USD/ZAR            5.00                    3       7            9           12           14           15       17         19        21
                                                   5.50                    8      11           13           15           17           19       21         23        25
                                                   6.00                 13        15           17           19           21           23       25         27        30
                                                   6.50                 17        18           20           23           25           27       29         32        34
                                                   7.00                 20        21           24           26           29           31       34         36        39
                                                   7.50                 23        25           27           30           32           35       38         40        43
                                                   8.00                 26        28           31           33           36           39       42         45        48
                                                   8.50                 29        31           34           37           40           43       46         49        52
                                                   9.00                 32        34           38           41           44           47       50         53        57
                                Source: Nedbank Capital estimates


                               Great Basin Gold is trading at a 33% discount to its NPV if calculated at spot rates.

                                Table 3 : Sensitivities to NPV

                                                   USD/oz           1,150      1,200         1,250      1,300       1,350       1,400        1,450      1,500     1,550
                                USD/ZAR            5.00                 (2)        0            3           6            9            12       15         17        20
                                                   5.50                    2       4            8           11           14           17       20         24        27
                                                   6.00                    6       9           12           16           19           23       26         30        33
                                                   6.50                 10        13           17           21           24           28       32         36        40
                                                   7.00                 14        17           21           26           30           34       38         42        46
                                                   7.50                 18        22           26           31           35           39       44         48        52
                                                   8.00                 23        26           31           35           40           45       50         54        59
                                                   8.50                 27        30           35           40           45           50       55         60        65
                                                   9.00                 31        35           40           45           51           56       61         66        72
                                Source: Nedbank Capital estimates




Great Basin Gold | Financial Statements | 6 December 2010                                                                                                                 2
                                                                                                                                                                      33
Income statement

Rm                                                        FY08A    FY09A     FY10F     FY11F            FY12F
Revenue                                                    198.8    252.7     755.4      2441             2952
Cost of sales                                             -147.6   -153.4    -561.8     -1273            -1593
Operating costs                                           -805.5   -487.5    -273.8    -234.1           -272.5
EBITDA                                                    -754.3   -388.2     -80.2     934.1             1087
DDA & Impairment (ex gw)                                   -52.2    -24.3     -65.5    -197.3           -273.0
EBITA                                                     -806.4   -412.5    -145.7     736.8            814.1
Goodwill (amort/impaired)                                    n/a      n/a       n/a        n/a              n/a
EBIT                                                      -806.4   -412.5    -145.7     736.8            814.1
Net interest                                                9.03     20.2     -2.29      -61.9            -45.6
Associates (pre-tax)                                         n/a      n/a       n/a        n/a              n/a
Other pre-tax items                                       -104.2    -0.36     -37.4       0.00             0.00
Reported PTP                                              -901.6   -392.7    -185.4     674.9            768.5
Taxation                                                   256.1     36.1     -8.19      -81.0            -92.2
Minority interests                                          0.00     0.00      0.00       0.00             0.00
Other post-tax items                                        0.00    -75.6     127.0       0.00             0.00
Reported net profit                                       -645.5   -432.2     -66.6     593.9            676.3
Tot normalised items                                       -7.19    -89.3      78.5       0.00             0.00
Normalised EBITDA                                         -754.3   -388.2     -80.2     934.1             1087
Normalised PTP                                            -894.4   -378.9    -136.9     674.9            768.5
Normalised net profit                                     -638.3   -342.9    -145.1     593.9            676.3
Source: Company data, Nedbank Capital forecasts                                                     year to Dec



Balance sheet

Rm                                                        FY08A    FY09A     FY10F     FY11F            FY12F
Cash & market secs (1)                                    260.9    628.2     105.7     583.1             826.8
Other current assets                                      149.0    279.7     148.6     603.4             849.8
Tangible fixed assets                                        n/a      n/a       n/a       n/a               n/a
Intang assets (incl gw)                                     0.00    0.00      0.00      0.00              0.00
Oth non-curr assets                                       2430     2942      4795       4991              4917
Total assets                                               2840     3850      5049      6177              6593
Short term debt (2)                                        7.13    307.3      62.3      62.3              62.3
Trade & oth current liab                                  206.3    205.1     340.1     265.3             301.3
Long term debt (3)                                        482.7    610.6      1572      2172              1872
Oth non-current liab                                      143.8    102.9     189.8     198.7             202.9
Total liabilities                                         839.9    1226      2164      2698              2439
Total equity (incl min)                                    2000     2624      2885      3479              4155
Total liab & sh equity                                     2840     3850      5049      6177              6593
Net debt                                                  228.9    289.7      1529      1651              1108
Source: Company data, Nedbank Capital forecasts                                                  year ended Dec



Cash flow statement

Rm                                                        FY08A    FY09A     FY10F     FY11F            FY12F
EBITDA                                                    -754.3   -388.2      -80.2    934.1             1087
Change in working capital                                   95.6   -108.6       42.5      1.88            14.8
Net interest (pd) / rec                                     15.1     -2.74     -11.9     -61.9           -45.6
Taxes paid                                                -262.6     -41.5     -8.36     -81.0           -92.2
Other oper cash items                                      316.1      98.0      87.5    210.7            245.1
Cash flow from ops (1)                                    -590.1   -442.9       29.5     1004             1209
Capex (2)                                                 -339.2   -855.1     -1411     -1126           -665.4
Disposals/(acquisitions)                                    3.87      3.87      3.87      3.87            3.87
Other investing cash flow                                    n/a       n/a       n/a       n/a              n/a
Cash flow from invest (3)                                 -335.4   -851.2     -1407     -1123           -661.5
Incr / (decr) in equity                                     47.1     1142     223.0       0.00             0.00
Incr / (decr) in debt                                      532.3    608.9     642.0     600.0           -300.0
Ordinary dividend paid                                      29.1     -1.47      0.00      0.00            0.00
Preferred dividends (4)                                      n/a       n/a       n/a       n/a              n/a
Other financing cash flow                                    n/a       n/a       n/a       n/a              n/a
Cash flow from fin (5)                                     608.5     1749     865.1     600.0           -300.0
Forex & disc ops (6)                                        0.00      13.8      7.22      0.00            0.00
Inc/(decr) cash (1+3+5+6)                                 -317.0    468.7    -505.1     481.3            247.6
Equity FCF (1+2+4)                                        -929.3    -1298     -1381    -122.6            543.7
Source: Company data, Nedbank Capital forecasts                                                     year to Dec




Great Basin Gold | Key Financial Data | 6 December 2010
                                                                                                           34
Standard ratios                                      Great Basin Gold                                DRDGold                              Pan African Resources

Performance                              FY08A FY09A FY10F FY11F FY12F                         FY11F FY12F FY13F                          FY11F    FY12F   FY13F
Sales growth (%)                           1017    27.1      198.9   223.1    21.0               25.3    -14.4        -4.56                 20.5    14.2      7.15
EBITDA growth (%)                          101.5 -48.5       -79.3     n/a    16.4               19.8     25.9        -0.61                 32.4    7.77      2.20
EBIT growth (%)                            115.5 -48.8       -64.7     n/a    10.5              443.8     55.0         0.65                 42.8    6.36      0.68
Normalised EPS growth (%)                   42.0 -66.3       -60.8     n/a    13.9              -66.8     8.75         7.67                 55.6    7.34      2.05
EBITDA margin (%)                         -379.5 -153.6      -10.6    38.3    36.8               10.5     15.5         16.1                 40.2    38.0      36.2
EBIT margin (%)                           -405.7 -163.2      -19.3    30.2    27.6               6.11     11.1         11.7                 38.0    35.4      33.2
Net profit margin (%)                     -321.1 -135.7      -19.2    24.3    22.9               0.19    -0.28        -0.31                 28.8    27.0      25.8
Return on avg assets (%)                   -25.3 -10.7       -3.22    11.4    11.1               3.82     5.68         5.71                 23.0    19.0      15.7
Return on avg equity (%)                   -32.2 -14.8       -5.27    18.7    17.7               0.29    -0.37        -0.39                 28.9    23.9      19.7
ROIC (%)                                   -40.6 -13.3       -3.60    12.0    11.4               7.21     12.3         13.9                 38.7    36.6      34.6
ROIC - WACC (%)                             0.00   0.00       0.00    0.00    0.00               0.00     0.00         0.00                 0.00    0.00      0.00
                                                                        year to Dec                              year to Jun                            year to Jun

Valuation
EV/sales (x)                                36.9     29.2     11.4    3.58    2.78               0.43     0.44        0.35                  1.21    0.84      0.54
EV/EBITDA (x)                                n/m      n/m      n/m    9.37    7.55               4.13     2.83        2.17                  3.02    2.22      1.48
EV/EBITDA @ tgt price (x)                    n/m      n/m      n/m    10.1    8.17               4.98     3.51        2.85                  4.26    3.37      2.61
EV/EBIT (x)                                  n/m      n/m      n/m    11.9    10.1               7.11     3.96        2.99                  3.20    2.38      1.61
EV/invested capital (x)                     3.29     2.53     1.95    1.71    1.56               0.78     0.76        0.71                  1.53    1.14      0.77
Price/book value (x)                        2.16     2.56     2.86    2.37    1.99               0.81     0.82        0.82                  1.37    1.08      0.89
Equity FCF yield (%)                       -22.1    -19.4    -19.1   -1.49    6.59               7.08     11.3        17.0                  10.7    16.3      19.7
Normalised PE (x)                            n/m      n/m      n/m    13.9    12.2              274.1      n/m         n/m                  5.41    5.04      4.94
Norm PE @ tgt price (x)                      n/m      n/m      n/m    15.2    13.4              320.6      n/m         n/m                  7.15    6.66      6.53
Dividend yield (%)                          0.00     0.00     0.00    0.00    0.00               0.00     0.00        0.00                  0.00    0.00      0.00
                                                                        year to Dec                              year to Jun                            year to Jun

Per share data                           FY08A FY09A FY10F FY11F FY12F                Solvency                                 FY08A FY09A FY10F FY11F FY12F
Tot adj dil sh, ave (m)                   209.5 333.4 360.0 410.7 410.7               Net debt to equity (%)                     11.4   11.0 53.0  47.5  26.7
Reported EPS (ZAR)                        -3.08 -1.30 -0.18  1.45  1.65               Net debt to tot ass (%)                    8.06   7.52 30.3  26.7  16.8
Normalised EPS (ZAR)                      -3.05 -1.03 -0.40  1.45  1.65               Net debt to EBITDA                        -0.30 -0.75 -19.1  1.77  1.02
Dividend per share (ZAR)                   0.00  0.00  0.00  0.00  0.00               Current ratio (x)                          1.92   1.77 0.63  3.62  4.61
Equity FCF per share (ZAR)                -4.44 -3.89 -3.84 -0.30  1.32               Operating CF int cov (x)                   22.7 -145.6 4.17  18.5  29.5
Book value per sh (ZAR)                    9.30  7.86  7.02  8.47  10.1               Dividend cover (x)                         0.00   0.00 0.00  0.00  0.00
                                                                        year to Dec                                                                     year to Dec

Priced as follows: GBGJ.J - R20.09; DRDJ.J - R3.42; PANJ.J - R1.09
Source: Company data, Nedbank Capital forecasts




Valuation methodology
Our 12 –month target price is based on an equally weighted average of five valuation metrics: price to NPV, price to book,
EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple but reserve the
right to make adjustments depending on where the company is in its life cycle and to bring multiples in line with industry averages.
Both up- and downside risks to our valuation include variations to our currency, gold price, production and cost assumptions.
Source: Nedbank Capital




Great Basin Gold | Performance and Valuation | 6 December 2010
                                                                                                                                                               35
Company description                                                                                                                  Sell   Price relative to country

Great Basin Gold is a junior mining company developing two projects in South Africa (Burnstone) and in the USA                               160

(Hollister). Hollister is currently in the trial mining phase and at Burnstone infrastructure development and plant                          140
construction are almost complete. Both projects should reach full production capacity of a combined 400,000
                                                                                                                                             120
ounces within 2-3 years. The company is primarily listed in Toronto and has secondary listings in New York and in
Johannesburg.                                                                                                                                100

                                                                                                                                             80


                                                                                                                                             60

                                                                                                                                             40
                                                                                                                                               Dec Mar     Jul   Oct    Feb Jun Sep Jan            Apr Aug Nov
                                                                                                                                                07 08      08    08     09 09 09 10                10 10 10

                                                                                                                                                                       Price relative to country




Strategic analysis                                                            Average SWOT company score:                            3      Production split FY11

Strengths                                                                                                                            5             Hollister
                                                                                                                                                    37%
GBG's key strength is it's high-grade Hollister operation. Grades of more than 30g/t should result in low operating
costs of around US$450-500/oz. Also, the development of both projects is now fully funded.
Weaknesses                                                                                                                           2
                                                                                                                                                                                                   Burnstone
Beneficiation at Hollister is suboptimal as the ore has to be trucked around 300 miles to the Esmeralda plant.                                                                                       63%
Dismantling and re-erected the plant at the mine is unviable due to lengthy permitting.
Opportunities                                                                                                                        3      Source: Company data
Opportunities to unlock value may arise from further consolidation in the industry.
Threats                                                                                                                              3      Market data
The main threats to the company's profitability and sustainability are continued rand strength and a weaker dollar
                                                                                                                                            Headquarters
gold price.                                                                                                                                 1108-1030 West Georgia St, Vanvouver BC,
                                                                                                                                            Canada, V6E 2Y3
Scoring range is 1-5 (high score is good)
                                                                                                                                            Website
                                                                                                                                            www.grtbasin.com
                                                                                                                                            Shares in issue
                                                                                                                                            353.2m
                                                                                                                                            Freefloat
                                                                                                                                            100%
                                                                                                                                            Majority shareholders
                                                                                                                                            Van Eck Ass (6%), Tranter Gold (6%),
                                                                                                                                            Mackenzie Financial Corporation (5%)

Country view: South Africa                                                                                                                  Country rel to M East & Africa

The South African economy is underpinned by its mineral wealth, but the rand's volatility tends to make investors                            150

sceptical, so most emerging market fund managers are underweight South Africa. Due to the strong commodity                                   140
sector, flows into the bond and equity markets are improving. South Africa should also benefit from the China
                                                                                                                                             130
growth theme, but we believe more stability in the rand is necessary before an upgrade to Neutral would be
warranted.                                                                                                                                   120

                                                                                                                                             110
The country view is set in consultation with the relevant company analyst but is the ultimate responsibility of the Strategy Team.
                                                                                                                                             100

                                                                                                                                             90
                                                                                                                                               Dec Mar     Jul   Oct    Feb    Jun   Sep Jan       Apr Aug Nov
                                                                                                                                                07 08      08    08     09      09   09 10         10   10 10

                                                                                                                                                                             MarketIndex




Competitive position                                                                       Average competitive score:                4-     Broker recommendations

Supplier power                                                                                                                       3-      8
Dominant positions of suppliers of steel and reagents continue to have an above inflationary impact on operating
costs.                                                                                                                                       6

Barriers to entry                                                                                                                    5+      4
High capital requirements, long lead times in developing projects and increasing difficulty in finding economically
viable resources present extremely high barriers to entry.                                                                                   2

Customer power                                                                                                                       3-      0
Declining production levels as reserves are depleted and mines become deeper and more mature make the South                                             Sell                  Hold                  Buy
African gold mining industry a less dominant force in the supply chain.
                                                                                                                                            Source: Bloomberg
Substitute products                                                                                                                  3-
Platinum jewellery and alternative consumer products (eg i-Pods) have replaced demand for gold jewellery,
exacerbating the impact of high prices and price volatility on demand.
Rivalry                                                                                                                              5-
Competition is fierce in a global race to replace depleted reserves, where the player with the lowest operating
costs and highest cash flows has the strongest position.
Scoring range 1-5 (high score is good) Plus = getting better Minus = getting worse




Great Basin Gold | Strategic and Competitive Overview | 6 December 2010
                                                                                                                                                                                                          36
                                                                                                                                                                          Produced by: Nedbank Capital+
Equity | South Africa | Mining


                                 6 December 2010




                                                                                        Harmony Gold
                                 Hold                                                   Maintaining a neutral stance
                                 Target price
                                 R94.00 (from R95.00)
                                                                                        Harmony continues to underperform its peers due to concerns about rand
                                                                                        strength and limited upside potential from growth projects. Still, we remain
                                 Price
                                 R80.00                                                 neutral on this company as we believe the timely development of growth projects
                                 Short term (0-60 days)                                 in Papua New Guinea could drive a substantial increase in value.
                                 n/a
                                 Market view                                            Key forecasts
                                 Underweight
                                                                                                                                                             FY09A    FY10A    FY11F      FY12F      FY13F
                                                                                        Revenue (Rm)                                                         11,496   11,284   13,517     16,349     17,436
                                 Price performance                                      EBITDA (Rm)                                                           3,491    1,516    2,940 &    4,495 &    4,721
                                                                                        Reported net profit (Rm)                                              2,928     -193    867.0 &    1,432 &    1,521
                                                            (1M)       (3M)    (12M)    Normalised net profit (Rm)                                            2,253     -166    559.0 &    1,432 &    1,521
                                 Price (R)                 79.00      76.16    85.16    Normalised EPS (R)                                                     5.39    -0.39     1.30 &     3.34 &     3.55
                                 Absolute (%)                 4.4        8.3     -3.1   Dividend per share (R)                                                50.00    62.10    22.90 %    33.40 %    35.50 %
                                 Rel market (%)               2.6       -3.5    -15.7   Dividend yield (%)                                                    62.50    77.60    28.70      41.70      44.30
                                 Rel sector (%)              -0.1       -8.7     -9.1   Normalised PE (x)                                                     14.80      n/m    61.40      24.00      22.60
                                                                                        EV/EBITDA (x)                                                          9.37    22.90    11.90       7.53       6.81
                                   Dec 07         Dec 08            Dec 09
                                                                                        EV/invested capital (x)                                                1.17     1.17     1.14       1.10       1.06
                                 140
                                                                                        ROIC - WACC (%)                                                        0.00     0.00     0.00       0.00       0.00
                                 120                                                                                                                                                   year to Jun, fully diluted
                                                                                        Use of %& indicates that the line item has changed by at least 5%.
                                                                                        Accounting standard: IFRS
                                 100
                                                                                        Source: Company data, Nedbank Capital forecasts
                                  80
                                                                                        Scope for further restructuring
                                  60
                                                                                        Harmony has made great strides in transforming itself into a sustainable business. However,
                                  40

                                         HARJ.J            Jo'burg All-Share Index
                                                                                        while its South African growth projects are starting to deliver, their net impact on profitability
                                                                                        is still restricted by high cost operations, particularly at Joel, Unisel and Evander. We expect
                                 Market capitalisation                                  management to acknowledge its lack of alternatives and close these operations down in the
                                 R34.31bn (€3.79bn)                                     not too distant future.
                                 Average (12M) daily turnover
                                 R120.14m (€12.29m)                                     PNG success is key to Harmony’s credibility
                                 Sector: JSE Mining                                     While we are intrigued by the results of initial exploration at Wafi/Golpu, we think the
                                 RIC: HARJ.J, HAR SJ
                                 Priced R80.00 at close 2 Dec 2010.                     company needs to prove that it can operate successfully in this region before it begins to
                                 Source: Bloomberg
                                                                                        develop another project in the area. In our view, efficiencies and throughput at the Hidden
                                                                                        Valley mill also need to be improved dramatically to reduce operating costs and make the
                                                                                        mine profitable.

                                                                                        Operational and resource risks remain high
                                                                                        We are not able to rate Harmony higher due to the risks we have identified related to two of
                                                                                        the group’s growth projects: Doornkop and Kusasalethu. At Doornkop, Kimberly reef grades
                                                                                        are extremely low and need to be supplemented with higher-grade South reef to be viable.
                                                                                        The mine is also under-sampled, and a new sampling regime is being implemented.
                                                                                        Meanwhile, productivity remains a challenge at Kusasalethu, as the long distance between
                                                                                        the shaft and working areas limits face time.

                                                                                        Maintain Hold and marginally lower TP to R94
                                 Analyst
                                                                                        We maintain our Hold recommendation on Harmony and marginally lower our 12-month
                                 Christian Siebert                                      target price to R94 (previously R95). Revisions to our gold price and exchange rate
                                 South Africa
                                 +27 11 295 8212                                        assumptions were largely offset by changes to our production and cost estimates. The risk
                                 Csiebert@Nedbankcapital.co.za                          profile of our forecasts is high.

                                 7/F Corporate Place 135 Rivonia Road,
                                 Johannesburg, South Africa
                                                                                        Important disclosures can be found in the Disclosures Appendix.
                                                                                        +
                                                                                         Distributed outside Sub-Saharan Africa by The Royal Bank of Scotland N.V. and its affiliates under a
                                 http://research.rbsm.com                               strategic alliance with Nedbank Capital.




                                                                                                                                                                                                                    37
                              Assumptions
                              The table below summarises our key forecasts. We believe that the group’s production target of
                              2m ounces per annum will remain out of reach. While risks to our cost forecasts are on the
                              upside, we believe that increasing output from some of the group’s lower-cost growth projects will
                              partially offset inflationary pressure at the other mines.

                               Table 1 : Summary of our key expectations

                                                                              2007A     2008A    2009A    2010A    2011F    2012F   2013F    2014F
                               Received gold price              US$/oz           639      746       869    1,080    1,315   1,299    1,200    1,061
                                                                R/kg         147,580 175,029 250,836 263,113 308,289 320,765 316,311 283,323
                               Exchange rate                    US$/R           7.19      7.28     9.02     7.57     7.29    7.68     8.20     8.31
                               Gold production                  Moz         2,334,0991,684,0181,460,8301,406,7601,396,9051,638,6371,772,2761,766,598
                               Total cash costs                 US$/oz           487      540       589      784     925      848      790      753
                                                                R/kg         112,407 125,846 168,457 191,104 216,837 209,595 208,319 201,235
                               Replacement costs (NCE)          US$/oz           674      757       830    1,158    1,246   1,075      960      886
                                                                R/kg         155,637 176,687 237,605 289,781 292,080 265,517 253,026 236,758
                               Cash cost margins                %             23.8%     28.1%     33.3%   25.9%    30.3%    34.7%   34.1%    29.0%
                               Replacement costs margins        %             (0.8%)     3.9%     11.5%   (6.6%)   11.0%    22.0%   24.7%    20.5%
                               Source: Company data, Nedbank Capital




                              Sensitivities
                              The starting point for our analysis is spot rates, which we have rounded off to US$1,350/oz and
                              USD/ZAR7.00 for the purposes of these calculations. Spot rates are entered into our models in
                              nominal terms over the life of the operations with 0% cost escalation. We then change the gold
                              price and the exchange rate in increments of US$50/oz and US$/ZAR0.50 and calculate the
                              impact on our target price, cash earnings and NPV estimates. The result of this calculation may
                              be interpreted as what the market is currently discounting.

                              Applying our valuation methodology using spot rates indicates only limited upside potential from
                              the current share price.

                               Table 2 : Sensitivities to our target price

                                                  USD/oz        1,150       1,200      1,250     1,300    1,350    1,400    1,450    1,500    1,550
                               USD/ZAR               5.00           12         13        14        34       42       48       50        52       55
                                                     5.50           16         38        47        52       55       57       60        63       66
                                                     6.00           49         56        58        61       65       68       71        75       78
                                                     6.50           61         64        68        71       75       79       82        86       90
                                                     7.00           70         74        78        81       85       89       93        97      101
                                                     7.50           79         83        87        92       96      100      105      109       113
                                                     8.00           88         93        97       102      107      111      116      120       125
                                                     8.50           98        102       107       112      117      122      127      132       137
                                                     9.00           107       112       117       123      128      133      138      143       149
                               Source: Nedbank Capital


                              Based on spot rates, we estimate that Harmony is trading at a 23% discount to its NPV.

                               Table 3 : Sensitivities to NPV

                                                     US$/oz      1,150       1,200     1,250     1,300    1,350    1,400    1,450    1,500    1,550
                               US$/ZAR                   5.00                                       11       22       31       40       48       56
                                                      5.50                      14        25        35       44       53       62       70       79
                                                      6.00             25       36        46        55       64       74       83       92      101
                                                      6.50             44       54        64        74       84       94     103       113      123
                                                      7.00             61       72        82        93      103      114     124       134      144
                                                      7.50             77       88       100       111      122      133     144       155      166
                                                      8.00             93      106       117       129      141      152     164       176      187
                                                      8.50          110        122       134       147      159      172     184       197      209
                                                      9.00          125        139       152       165      178      191     204       217      230
                               Source: Nedbank Capital




Harmony Gold | Financial Statements | 6 December 2010                                                                                                  2
                                                                                                                                                   38
Income statement

Rm                                                    FY09A     FY10A     FY11F     FY12F            FY13F
Revenue                                               11496     11284     13517      16349            17436
Cost of sales                                         -8210      -9114     -9863    -11073           -11894
Operating costs                                       205.0     -654.0    -714.9     -780.7           -821.3
EBITDA                                                 3491       1516      2940       4495             4721
DDA & Impairment (ex gw)                              -1467      -1376     -1779      -2097            -2235
EBITA                                                  2024      140.0      1161       2398             2486
Goodwill (amort/impaired)                                 n/a       n/a       n/a        n/a              n/a
EBIT                                                    2024     140.0      1161       2398             2486
Net interest                                          238.0       -8.00   -188.3     -196.0           -145.3
Associates (pre-tax)                                      n/a       n/a       n/a        n/a              n/a
Other pre-tax items                                    -81.0       40.0    303.0        0.00            0.00
Reported PTP                                            2181     172.0      1276       2202             2341
Taxation                                               -32.0    -333.0    -405.9     -770.8           -819.2
Minority interests                                      0.00       0.00      0.00      0.00             0.00
Other post-tax items                                  779.0       -32.0     -3.00      0.00             0.00
Reported net profit                                    2928     -193.0     867.0       1432             1521
Tot normalised items                                   675.0      -27.0    308.0        0.00             0.00
Normalised EBITDA                                      3491       1516      2940       4495             4721
Normalised PTP                                          2285     167.0     964.9       2202             2341
Normalised net profit                                   2253    -166.0     559.0       1432             1521
Source: Company data, Nedbank Capital forecasts                                                   year to Jun



Balance sheet

Rm                                                    FY09A     FY10A     FY11F     FY12F            FY13F
Cash & market secs (1)                                  1950     770.0      1117      2144             3829
Other current assets                                   1980       2297      2431      3612             4495
Tangible fixed assets                                 27912     29485     31206     32349             33037
Intang assets (incl gw)                                2223      2210      2199      2199              2199
Oth non-curr assets                                    2262       2574      1543       n/m              n/m
Total assets                                          36327     37336     38496     40023             41426
Short term debt (2)                                    252.0     209.0     207.0     207.0            207.0
Trade & oth current liab                               1494      1542       1170      1329             1329
Long term debt (3)                                     110.0     981.0      1470      1470             1470
Oth non-current liab                                   4946      5395       5740      5820             5854
Total liabilities                                       6802      8127      8587      8826             8860
Total equity (incl min)                               29525     29209     29909     31197             32566
Total liab & sh equity                                36327     37336     38496     40023             41426
Net debt                                              -1588      420.0     560.5    -467.0            -2152
Source: Company data, Nedbank Capital forecasts                                                year ended Jun



Cash flow statement

Rm                                                    FY09A     FY10A     FY11F     FY12F            FY13F
EBITDA                                                  3491      1516      2940      4495              4721
Change in working capital                              -1715    -256.4      -75.7     -24.1              10.3
Net interest (pd) / rec                                177.0     128.0    -159.3    -196.0            -145.3
Taxes paid                                            -704.0    -125.0    -415.9    -770.8            -819.2
Other oper cash items                                   1282     320.4     139.7    -269.6            -289.2
Cash flow from ops (1)                                  2531      1583      2428      3234              3478
Capex (2)                                              -2644     -3493     -2607     -2069             -1643
Disposals/(acquisitions)                                1630      1630      1630      1630              1630
Other investing cash flow                                 n/a       n/a       n/a       n/a               n/a
Cash flow from invest (3)                              -1014     -1863    -977.0    -439.5              -13.1
Incr / (decr) in equity                                 1953       18.0      8.00      0.00              0.00
Incr / (decr) in debt                                  -3768     845.0     493.0       0.00              0.00
Ordinary dividend paid                                   0.00   -213.0    -256.3    -137.5            -149.1
Preferred dividends (4)                                   n/a       n/a       n/a       n/a               n/a
Other financing cash flow                                 n/a       n/a       n/a       n/a               n/a
Cash flow from fin (5)                                 -1815     650.0     244.7    -137.5            -149.1
Forex & disc ops (6)                                     2.00      3.00      11.0      0.00              0.00
Inc/(decr) cash (1+3+5+6)                             -295.7     373.0      1707      2658              3315
Equity FCF (1+2+4)                                    -112.7     -1910    -178.5      1165              1834
Source: Company data, Nedbank Capital forecasts                                                   year to Jun




Harmony Gold | Key Financial Data | 6 December 2010
                                                                                                         39
Standard ratios                                          Harmony                                     AngloGold Ashanti                             Gold Fields

Performance                              FY09A FY10A FY11F FY12F FY13F                             FY10F FY11F FY12F                          FY10F    FY11F     FY12F
Sales growth (%)                            25.4    -1.84     19.8        20.9   6.65                27.4     18.8        -2.46                 6.41    9.97      -0.50
EBITDA growth (%)                          137.3    -56.6     93.9        52.9   5.03               -5.54     36.4        -10.8                 4.90    23.2      -8.32
EBIT growth (%)                            220.8    -93.1    729.4       106.5   3.65               -12.6     55.5        -16.6                -2.60    37.7      -12.8
Normalised EPS growth (%)                    n/a      n/a      n/a       156.1   6.28               -27.4     17.2        -10.4                -9.77    70.6      -11.6
EBITDA margin (%)                           30.4     13.4     21.7        27.5   27.1                37.6     43.2         39.5                 39.2    44.0       40.5
EBIT margin (%)                             17.6     1.24     8.59        14.7   14.3                24.5     32.0         27.4                 23.8    29.7       26.1
Net profit margin (%)                       19.6    -1.47     4.14        8.76   8.73                18.0     18.4         16.9                 10.1    15.7       14.0
Return on avg assets (%)                    5.82    -0.44     1.83        4.01   3.99                11.5     17.0         15.0                 7.01    12.2       10.3
Return on avg equity (%)                    8.30    -0.57     1.89        4.69   4.77                27.9     27.2         20.2                 7.56    12.3       10.1
ROIC (%)                                    5.13     0.36     2.82        5.67   5.82                24.0     30.0         26.0                 11.3    15.8       13.7
ROIC - WACC (%)                             0.00     0.00     0.00        0.00   0.00                0.00     0.00         0.00                 0.00    0.00       0.00
                                                                            year to Jun                              year to Dec                            year to Dec

Valuation
EV/sales (x)                                2.85     3.08     2.58        2.07   1.84                3.48     2.75        2.63                 2.66     2.33      2.25
EV/EBITDA (x)                               9.37     22.9     11.9        7.53   6.81                9.24     6.37        6.67                 6.77     5.30      5.56
EV/EBITDA @ tgt price (x)                   11.1     26.9     13.9        8.86   8.08                9.84     6.81        7.16                 6.77     5.30      5.56
EV/EBIT (x)                                 16.2    248.1     30.0        14.1   12.9                14.2     8.59        9.61                 11.2     7.83      8.64
EV/invested capital (x)                     1.17     1.17     1.14        1.10   1.06                3.81     3.71        3.71                 1.79     1.71      1.65
Price/book value (x)                        1.15     1.17     1.15        1.10   1.05                4.62     3.71        3.16                 1.86     1.73      1.62
Equity FCF yield (%)                       -0.34    -5.59    -0.52        3.40   5.35               -4.69     7.58        7.66                 4.37     6.49      6.09
Normalised PE (x)                           14.8      n/m     61.4        24.0   22.6                17.7     15.1        16.9                 25.0     14.6      16.5
Norm PE @ tgt price (x)                     17.4      n/m     72.1        28.2   26.5                18.9     16.2        18.0                 25.0     14.6      16.5
Dividend yield (%)                          62.5     77.6     28.7        41.7   44.3                39.9    130.4       116.7                156.7    264.2     228.4
                                                                            year to Jun                              year to Dec                            year to Dec

Per share data                           FY09A FY10A FY11F FY12F FY13F                    Solvency                                 FY09A FY10A FY11F FY12F FY13F
Tot adj dil sh, ave (m)                   418.2 426.8 428.9 428.9 428.9                   Net debt to equity (%)                    -5.38  1.44  1.87 -1.50 -6.61
Reported EPS (ZAR)                         7.00 -0.45  2.02  3.34  3.55                   Net debt to tot ass (%)                   -4.37  1.12  1.46 -1.17 -5.20
Normalised EPS (ZAR)                       5.39 -0.39  1.30  3.34  3.55                   Net debt to EBITDA                        -0.45  0.28  0.19 -0.10 -0.46
Dividend per share (ZAR)                   50.0  62.1  22.9  33.4  35.5                   Current ratio (x)                          2.25  1.75  2.58  3.75  5.42
Equity FCF per share (ZAR)                -0.27 -4.48 -0.42  2.72  4.28                   Operating CF int cov (x)                  -17.3 -12.3  18.9  21.4  30.6
Book value per sh (ZAR)                    69.3  68.1  69.7  72.7  75.9                   Dividend cover (x)                         23.5 -0.62  5.68  10.0  10.0
                                                                            year to Jun                                                                     year to Jun

Priced as follows: HARJ.J - R80.00; ANGJ J - R336.99; GFIF.J - R120.99
Source: Company data, Nedbank Capital forecasts




Valuation methodology
Our 12 –month target price is based on an equally-weighted average of five valuation metrics: price to NPV, price to book,
EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple but reserve the
right to make adjustments depending on where the company is in its life cycle and to bring multiples in line with industry averages.
Both up- and downside risks to our valuation include variations to our currency, gold price, production and cost assumptions.
Source: Nedbank Capital




Harmony Gold | Performance and Valuation | 6 December 2010
                                                                                                                                                                   40
Company description                                                                                                                  Hold   Price relative to country

Harmony is one of the world's larger gold producers, with current annual production of around 1.5m ounces and a                              300

target to expand this to 2.2m ounces. Growth will come from the company's flagship projects: Hidden Valley
                                                                                                                                             250
(Papua New Guinea) and Elandsrand and Phakisa (South Africa). Over the last five years, the group's gold
production has declined from around 3.5m ounces per annum as assets were sold to shore up its balance sheet                                  200

and loss making mines were closed. The group has the highest operating costs among its peers and, with the bulk
                                                                                                                                             150
of production in South Africa, margins are extremely sensitive to the rand. Harmony's primary listing is in
Johannesburg, with a secondary listing on the NYSE.                                                                                          100


                                                                                                                                             50
                                                                                                                                               Dec Mar    Jul   Oct Feb Jun Sep Jan Apr Aug Nov
                                                                                                                                                07 08     08    08 09 09 09 10 10        10 10

                                                                                                                                                                      Price relative to country




Strategic analysis                                                            Average SWOT company score:                            3      Production split FY11F

Strengths                                                                                                                            5                  Papua New
                                                                                                                                                          Guinea
Harmony's foothold in Papua New Guinea gives it a strong platform to find and develop further projects in this                                             9%

high-potential region.
Weaknesses                                                                                                                           2                                                            South Africa
                                                                                                                                                                                                     91%
The company's high cost base and high exposure to South Africa make operating margins very sensitive to the
rand.
Opportunities                                                                                                                        2      Source: Nedbank Capital forecasts
Opportunities to unlock value may arise from further divestiture of marginal assets.
Threats                                                                                                                              3      Market data
The main threats to the company's profitability and sustainability are continued rand strength and a weaker US$
                                                                                                                                            Headquarters
gold price.                                                                                                                                 Randfontein Office Park, Cnr Main Reef Rd and
                                                                                                                                            Ward Ave, Randforntein, 1759 South Africa
Scoring range is 1-5 (high score is good)
                                                                                                                                            Website
                                                                                                                                            www.harmony.co.za
                                                                                                                                            Shares in issue
                                                                                                                                            428.9m
                                                                                                                                            Freefloat
                                                                                                                                            100%
                                                                                                                                            Majority shareholders
                                                                                                                                            ARM (15%), Allan Gray (13%), Blackrock
                                                                                                                                            (10%)

Country view: South Africa                                                                                                                  Country rel to M East & Africa

The South African economy is underpinned by its mineral wealth, but the rand's volatility tends to make investors                            150

sceptical, so most emerging market fund managers are underweight South Africa. Due to the strong commodity                                   140
sector, flows into the bond and equity markets are improving. South Africa should also benefit from the China
                                                                                                                                             130
growth theme, but we believe more stability in the rand is necessary before an upgrade to Neutral would be
warranted.                                                                                                                                   120

                                                                                                                                             110
The country view is set in consultation with the relevant company analyst but is the ultimate responsibility of the Strategy Team.
                                                                                                                                             100

                                                                                                                                             90
                                                                                                                                               Dec Mar    Jul   Oct    Feb    Jun   Sep Jan       Apr Aug Nov
                                                                                                                                                07 08     08    08     09      09   09 10         10   10 10

                                                                                                                                                                            MarketIndex




Competitive position                                                                       Average competitive score:                4-     Broker recommendations

Supplier power                                                                                                                       3-      7
The dominant positions of suppliers of steel and reagents continue to have an above-inflationary impact on                                   6
operating costs.                                                                                                                             5
Barriers to entry                                                                                                                    5+      4
                                                                                                                                             3
High capital requirements, long lead times in developing projects and increasing difficulty in finding economically
                                                                                                                                             2
viable resources present extremely high barriers to entry.
                                                                                                                                             1
Customer power                                                                                                                       3-      0
Declining production levels as reserves are depleted and mines become deeper and more mature make the South                                             Sell                 Hold                 Buy
African gold mining industry a less dominant force in the supply chain.
                                                                                                                                            Source: Bloomberg
Substitute products                                                                                                                  3-
Platinum jewellery and alternative consumer products (eg, i-Pods) have replaced the demand for gold jewellery,
exacerbating the impact of high prices and price volatility on demand.
Rivalry                                                                                                                              5-
Competition is fierce in a global race to replace depleted reserves. The player with the lowest operating costs and
highest cash flows has the strongest position.
Scoring range 1-5 (high score is good) Plus = getting better Minus = getting worse




Harmony Gold | Strategic and Competitive Overview | 6 December 2010
                                                                                                                                                                                                          41
                                                                                                                                                                           Produced by: Nedbank Capital+
Equity | South Africa | Mining


                                 6 December 2010




                                                                                           Pan African Resources
                                 Buy                                                       From strength to strength
                                 Target price
                                 R1.44 (from R1.16)
                                                                                           There is little not to like about this company. It is growing and diversifying, and
                                                                                           thereby accreting value and reducing the risk associated with single-product
                                 Price
                                 R1.09                                                     companies. It is improving operating efficiencies at its existing operations and
                                 Short term (0-60 days)                                    maximising value. It has more near-term growth projects in its pipeline.
                                 n/a
                                 Market view                                               Key forecasts
                                 Underweight
                                                                                                                                                                FY09A   FY10A   FY11F    FY12F        FY13F
                                                                                           Revenue (Rm)                                                         761.7   818.6   986.6      1,126        1,207
                                 Price performance                                         EBITDA (Rm)                                                          329.8   299.7   396.8 % 427.7 % 437.1 %
                                                                                           Reported net profit (Rm)                                             107.9   201.3   280.0 % 300.9 % 307.1 %
                                                            (1M)       (3M)    (12M)
                                                                                           Normalised net profit (Rm)                                           127.7   176.8   283.8 % 304.6 % 310.9 %
                                 Price (R)                   1.07       0.84    0.94
                                                                                           Normalised EPS (R)                                                    0.12    0.13    0.20       0.22         0.22 %
                                 Absolute (%)                 2.8       31.0    17.0
                                 Rel market (%)               1.0       16.6         1.9   Dividend per share (R)                                                0.00    0.00    0.00       0.00         0.00
                                 Rel sector (%)              -1.7       10.4         9.8   Dividend yield (%)                                                    0.00    0.00    0.00       0.00         0.00
                                                                                           Normalised PE (x)                                                     9.43    8.42    5.41       5.04         4.94
                                  Dec 07          Dec 08            Dec 09
                                 1.4                                                       EV/EBITDA (x)                                                         4.57    4.64    3.02       2.22         1.48
                                                                                           EV/invested capital (x)                                               2.20    2.00    1.53       1.14         0.77
                                 1.2
                                                                                           ROIC - WACC (%)                                                       0.00    0.00    0.00       0.00         0.00
                                 1.0

                                 0.8                                                       Use of %& indicates that the line item has changed by at least 5%.                           year to Jun, fully diluted
                                                                                           Accounting standard: IFRS
                                 0.6                                                       Source: Company data, Nedbank Capital forecasts

                                 0.4

                                 0.2                                                       Phoenix platinum project finally going ahead
                                         PANJ.J            Jo'burg All-Share Index         Management recently gave an update on the Phoenix platinum project, and the outlined
                                                                                           parameters were broadly in line with our assumptions. The project still accounts for 20-25%
                                 Market capitalisation
                                                                                           of our valuation, and we see further upside potential if PAN leverages the stake Shanduka,
                                 R1.54bn (€169.55m)
                                                                                           its BEE partner, has in Lonmin. This may make tailings from Lonmin’s operations accessible
                                 Average (12M) daily turnover
                                 R0.91m (€0.09m)                                           to PAN, thereby increasing capacity and extending the life of Phoenix.
                                 Sector: JSE Mining
                                 RIC: PANJ.J, PAN SJ
                                                                                           Decision on Manica expected soon
                                 Priced R1.09 at close 2 Dec 2010.
                                 Source: Bloomberg
                                                                                           We expect a final decision on the Manica exploration project in Mozambique early next year.
                                                                                           We believe PAN may have found an earn-in partner to co-develop this unloved project (low
                                                                                           grade, low volume), which we consider a clean way to finally bring the development to
                                                                                           account.

                                                                                           Potential tailing project at Barberton
                                                                                           A pre-feasibility study is underway to access gold tailings dams at Barberton, PAN’s core
                                                                                           operation. We estimate that this would add 50% to Barberton’s current production capacity of
                                                                                           100,000oz pa while incurring low costs and little operational risk. The Barberton mine is on
                                                                                           track to achieve its production target of 100,000oz this year, although security costs are a
                                                                                           little higher than expected. However, the latter has very little impact on the mine's profitability.

                                                                                           Still a strong Buy
                                 Analyst                                                   We maintain our Buy recommendation on Pan African Resources and raise our target price
                                                                                           to R1.44 (R1.16) following revisions to our gold price, exchange rate, production and cost
                                 Christian Siebert
                                 South Africa                                              assumptions. The risk profile of our forecasts is high.
                                 +27 11 295 8212
                                 Csiebert@Nedbankcapital.co.za

                                 7/F Corporate Place 135 Rivonia Road,
                                 Johannesburg, South Africa
                                                                                           Important disclosures can be found in the Disclosures Appendix.
                                                                                           +
                                                                                            Distributed outside Sub-Saharan Africa by The Royal Bank of Scotland N.V. and its affiliates under a
                                 http://research.rbsm.com                                  strategic alliance with Nedbank Capital.




                                                                                                                                                                                                                     42
                               Assumptions
                               The following table summarises our key assumptions. Our production forecast includes PGM
                               ounces from Phoenix on a gold-equivalent basis. Further upside to our forecasts may come from
                               the exploitation of tailings at Barberton.

                               Table 1 : Summary of our key expectations

                                                                              2007 A 2008 A 2009 A 2010 A 2011 F 2012 F 2013 F 2014 F
                               Received gold price                 US$/oz           415       451       867    1,098     1,321   1,312    1,235     1,103
                                                                   R/kg       96,067 105,850 251,740 267,876 309,576 324,012 325,473 294,655
                               Exchange rate                       US$/R        7.19         7.28      9.02      7.57     7.29    7.68     8.20      8.31
                               Gold production                     Moz        90,022 95,949 98,864 97,483 102,463 112,949 122,679 124,076
                               Total cash costs                    US$/oz           465       476       469      650      701      722      692       712
                                                                   R/kg      107,656 111,272 136,178 158,711 164,245 178,488 182,538 190,159
                               Replacement costs (NCE)             US$/oz           500       537       535      746     1,003     943      847       842
                                                                   R/kg      115,777 125,455 155,169 182,090 235,198 232,944 223,350 225,039
                               Cash cost margins                   %         (12.6%)       (1.8%)     45.1%    41.1%    46.9%    44.3%    42.3%     32.8%
                               Replacement costs margins           %         (21.1%) (14.8%)          37.4%    32.4%    30.7%    33.7%    35.5%     25.3%
                               Source: Company data, Nedbank Capital




                               Sensitivities
                               The starting point for our analysis is spot rates, which we have rounded off to US$1,350/oz and
                               US$/ZAR7.00 for the purposes of these calculations. Spot rates are entered into our models in
                               nominal terms over the life of the operations with 0% cost escalation. We then change the gold
                               price and the exchange rate in increments of US$50/oz and USD/ZAR0.50 and calculate the
                               impact on our target price, cash earnings and NPV estimates. The result of this calculation may
                               be interpreted as what the market is currently discounting.

                               The target price determined by our valuation methodology using spot rates is in line with our
                               revised target price.

                               Table 2 : Sensitivities to our target price

                                                     USD/oz      1,150      1,200     1,250         1,300     1,350     1,400    1,450     1,500     1,550
                               USD/ZAR             5.00           0.39       0.46         0.53       0.59      0.66      0.73     0.80      0.86      0.93
                                                   5.50           0.58       0.65         0.73       0.80      0.88      0.95     1.02      1.10      1.17
                                                   6.00           0.77       0.85         0.93       1.01      1.09      1.17     1.25      1.33      1.41
                                                   6.50           0.95       1.04         1.13       1.21      1.30      1.39     1.48      1.57      1.65
                                                   7.00           1.14       1.23         1.33       1.42      1.52      1.61     1.71      1.80      1.89
                                                   7.50           1.33       1.43         1.53       1.63      1.73      1.83     1.93      2.03      2.14
                                                   8.00           1.51       1.62         1.73       1.84      1.94      2.05     2.16      2.27      2.37
                                                   8.50           1.70       1.82         1.93       2.04      2.16      2.27     2.39      2.50      2.62
                                                   9.00           1.89       2.01         2.13       2.25      2.38      2.49     2.62      2.74      2.86
                               Source: Nedbank Capital


                               Calculating NPV based on spot rates implies that PAN is trading at a 26% discount to its value.

                               Table 3 : Sensitivities of our NPV

                                                     USD/oz      1,150      1,200         1,250      1,300     1,350     1,400    1,450     1,500     1,550
                               US$/ZAR             5.00       7,114.71 1,007.20       541.96        370.72    281.71    227.17   190.32    163.76    143.70
                                                   5.50         442.67     312.84     241.89        197.17    166.41    143.95   126.83    113.36    102.47
                                                   6.00         228.44     185.18     155.69        134.30    118.08    105.36    95.11     86.68     79.62
                                                   6.50         153.94     131.51     114.78        101.83     91.51     83.08    76.08     70.16     65.10
                                                   7.00         116.08     101.96         90.90      82.01      0.74     68.58    63.40     58.94     55.06
                                                   7.50          93.14      83.23         75.22      68.62     63.09     58.38    54.32     50.80     47.70
                                                   8.00          77.79      70.33         64.17      59.01     54.61     50.83    47.53     44.64     42.08
                                                   8.50          66.78      60.89         55.95      51.76     48.15     45.01    42.25     39.81     37.64
                                                   9.00          58.51      53.69         49.60      46.09     43.05     40.38    38.03     35.93     34.05
                               Source: Nedbank Capital




Pan African Resources | Financial Statements | 6 December 2010                                                                                              2
                                                                                                                                                        43
Income statement

Rm                                                      FY09A    FY10A     FY11F     FY12F           FY13F
Revenue                                                  761.7    818.6     986.6      1126             1207
Cost of sales                                           -410.7   -495.8    -523.4    -627.0           -696.4
Operating costs                                          -21.1    -23.1     -66.3     -71.7            -73.4
EBITDA                                                   329.8    299.7     396.8     427.7            437.1
DDA & Impairment (ex gw)                                 -34.0    -37.4     -22.4     -29.4            -36.1
EBITA                                                    295.8    262.3     374.4     398.3            401.0
Goodwill (amort/impaired)                                  n/a      n/a       n/a        n/a              n/a
EBIT                                                     295.8    262.3     374.4     398.3            401.0
Net interest                                              11.6     7.11      4.29      8.34             14.0
Associates (pre-tax)                                       n/a      n/a       n/a        n/a              n/a
Other pre-tax items                                      -72.4    -4.02     -3.77     -3.77            -3.77
Reported PTP                                             235.0    265.4     375.0     402.8            411.2
Taxation                                                -118.4    -91.7     -93.7    -100.7           -102.8
Minority interests                                       -61.3    -0.84     -1.18     -1.26            -1.29
Other post-tax items                                      52.6     28.5      0.00       0.00             0.00
Reported net profit                                      107.9    201.3     280.0     300.9            307.1
Tot normalised items                                     -19.8     24.5     -3.77     -3.77            -3.77
Normalised EBITDA                                        329.8    299.7     396.8     427.7            437.1
Normalised PTP                                           307.4    269.4     378.7     406.6            415.0
Normalised net profit                                    127.7    176.8     283.8     304.6            310.9
Source: Company data, Nedbank Capital forecasts                                                   year to Jun



Balance sheet

Rm                                                      FY09A    FY10A     FY11F     FY12F           FY13F
Cash & market secs (1)                                    30.4    146.1     338.4     588.4            890.6
Other current assets                                      32.5      56.4      74.9      84.3             84.5
Tangible fixed assets                                    419.3    385.7     432.2     453.8               n/a
Intang assets (incl gw)                                  152.9    149.9     149.9     149.9            149.9
Oth non-curr assets                                      281.4    316.1     406.7     472.9            965.1
Total assets                                             916.5     1054      1402      1749             2090
Short term debt (2)                                       0.26      0.24     0.24      0.24             0.24
Trade & oth current liab                                  77.2      81.2    100.8     118.6            134.5
Long term debt (3)                                        0.00      0.00      0.00      0.00             0.00
Oth non-current liab                                     123.0    131.0     179.0     207.4            225.3
Total liabilities                                        200.5    212.4     280.0     326.2            360.1
Total equity (incl min)                                  716.0    841.9     1122       1423             1730
Total liab & sh equity                                   916.5     1054      1402      1749             2090
Net debt                                                 -30.1   -145.9    -338.2    -588.2           -890.3
Source: Company data, Nedbank Capital forecasts                                                year ended Jun



Cash flow statement

Rm                                                      FY09A    FY10A     FY11F     FY12F           FY13F
EBITDA                                                   329.8    299.7     396.8     427.7            437.1
Change in working capital                                 0.00   -103.3     -13.9      2.83             3.93
Net interest (pd) / rec                                   0.00    -6.50      4.29      8.34             14.0
Taxes paid                                                0.00     0.00     -93.7    -100.7           -102.8
Other oper cash items                                   -206.4     23.1      30.4      31.5             32.3
Cash flow from ops (1)                                   123.4    213.0     323.8     369.6            384.5
Capex (2)                                                -62.2    -71.1    -159.8    -119.6            -82.3
Disposals/(acquisitions)                                  0.00     0.00      0.00      0.00             0.00
Other investing cash flow                                  n/a      n/a       n/a       n/a              n/a
Cash flow from invest (3)                                -62.2    -71.1    -159.8    -119.6            -82.3
Incr / (decr) in equity                                   11.3     0.50      0.00      0.00             0.00
Incr / (decr) in debt                                     13.8    -11.4      0.00      0.00             0.00
Ordinary dividend paid                                    0.00     0.00      0.00      0.00             0.00
Preferred dividends (4)                                    n/a      n/a       n/a       n/a              n/a
Other financing cash flow                                  n/a      n/a       n/a       n/a              n/a
Cash flow from fin (5)                                    25.1    -10.9      0.00      0.00             0.00
Forex & disc ops (6)                                     -34.6    -3.37      0.00      0.00             0.00
Inc/(decr) cash (1+3+5+6)                                 51.7    127.6     164.0     250.0            302.2
Equity FCF (1+2+4)                                        61.2    141.9     164.0     250.0            302.2
Source: Company data, Nedbank Capital forecasts                                                   year to Jun




Pan African Resources | Key Financial Data | 6 December 2010
                                                                                                         44
Standard ratios                                       P.A Resources                                 DRDGold                                Great Basin Gold

Performance                              FY09A FY10A FY11F FY12F FY13F                        FY11F FY12F FY13F                          FY10F    FY11F    FY12F
Sales growth (%)                            33.4     7.47     20.5   14.2   7.15                25.3    -14.4        -4.56               198.9    223.1       21.0
EBITDA growth (%)                           64.9    -9.13     32.4   7.77   2.20                19.8     25.9        -0.61               -79.3      n/a       16.4
EBIT growth (%)                             72.7    -11.3     42.8   6.36   0.68               443.8     55.0         0.65               -64.7      n/a       10.5
Normalised EPS growth (%)                  -11.1     11.9     55.6   7.34   2.05               -66.8     8.75         7.67               -60.8      n/a       13.9
EBITDA margin (%)                           43.3     36.6     40.2   38.0   36.2                10.5     15.5         16.1               -10.6     38.3       36.8
EBIT margin (%)                             38.8     32.0     38.0   35.4   33.2                6.11     11.1         11.7               -19.3     30.2       27.6
Net profit margin (%)                       16.8     21.6     28.8   27.0   25.8                0.19    -0.28        -0.31               -19.2     24.3       22.9
Return on avg assets (%)                    18.8     17.5     23.0   19.0   15.7                3.82     5.68         5.71               -3.22     11.4       11.1
Return on avg equity (%)                    17.0     22.7     28.9   23.9   19.7                0.29    -0.37        -0.39               -5.27     18.7       17.7
ROIC (%)                                    30.3     27.5     38.7   36.6   34.6                7.21     12.3         13.9               -3.60     12.0       11.4
ROIC - WACC (%)                             0.00     0.00     0.00   0.00   0.00                0.00     0.00         0.00                0.00     0.00       0.00
                                                                       year to Jun                              year to Jun                            year to Dec

Valuation
EV/sales (x)                                1.98     1.70     1.21   0.84   0.54                0.44     0.44        0.35                  11.4     3.58      2.77
EV/EBITDA (x)                               4.57     4.64     3.02   2.22   1.48                4.18     2.87        2.20                   n/m     9.35      7.53
EV/EBITDA @ tgt price (x)                   6.06     6.29     4.26   3.37   2.61                4.98     3.51        2.85                   n/m     10.1      8.17
EV/EBIT (x)                                 5.09     5.30     3.20   2.38   1.61                7.19     4.01        3.04                   n/m     11.8      10.1
EV/invested capital (x)                     2.20     2.00     1.53   1.14   0.77                0.79     0.77        0.72                  1.95     1.70      1.56
Price/book value (x)                        1.68     1.77     1.37   1.08   0.89                0.82     0.82        0.83                  2.85     2.37      1.98
Equity FCF yield (%)                        5.09     9.53     10.7   16.3   19.7                7.02     11.2        16.8                 -19.1    -1.49      6.60
Normalised PE (x)                           9.43     8.42     5.41   5.04   4.94               276.5      n/m         n/m                   n/m     13.9      12.2
Norm PE @ tgt price (x)                     12.5     11.1     7.15   6.66   6.53               320.6      n/m         n/m                   n/m     15.2      13.4
Dividend yield (%)                          0.00     0.00     0.00   0.00   0.00                0.00     0.00        0.00                  0.00     0.00      0.00
                                                                       year to Jun                              year to Jun                            year to Dec

Per share data                           FY09A FY10A FY11F FY12F FY13F               Solvency                                 FY09A FY10A FY11F FY12F FY13F
Tot adj dil sh, ave (m)                   1104 1366 1410 1410 1410                   Net debt to equity (%)                    -4.20 -17.3 -30.1 -41.3 -51.5
Reported EPS (ZAR)                         0.10  0.15  0.20  0.21  0.22              Net debt to tot ass (%)                   -3.28 -13.8 -24.1 -33.6 -42.6
Normalised EPS (ZAR)                       0.12  0.13  0.20  0.22  0.22              Net debt to EBITDA                        -0.09 -0.49 -0.85 -1.38 -2.04
Dividend per share (ZAR)                   0.00  0.00  0.00  0.00  0.00              Current ratio (x)                          0.81  2.49  4.09  5.66  7.24
Equity FCF per share (ZAR)                 0.06  0.10  0.12  0.18  0.21              Operating CF int cov (x)                   0.00  33.8 -96.3 -55.4 -33.8
Book value per sh (ZAR)                    0.65  0.62  0.80  1.01  1.23              Dividend cover (x)                         0.00  0.00  0.00  0.00  0.00
                                                                       year to Jun                                                                     year to Jun

Priced as follows: PANJ.J - R1.09; DRDJ.J - R3.42; GBGJ.J - R20.09
Source: Company data, Nedbank Capital forecasts




Valuation methodology
Our 12 –month target price is based on an equally weighted average of five valuation metrics: price to NPV, price to book,
EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple but reserve the
right to make adjustments depending on where the company is in its life cycle and to bring multiples in line with industry averages.
Both up- and downside risks to our valuation include variations to our currency, gold price, production and cost assumptions.
Source: Nedbank Capital




Pan African Resources | Performance and Valuation | 6 December 2010
                                                                                                                                                              45
Company description                                                                                                                  Buy   Price relative to country

Pan African Resources in a junior gold producer with ambitions to expand into PGMs. The company operates the                                120

highly profitable Barberton mine in South Africa, which has annual production of around 100,000 ounces at yields                            110

of 9-10g/t. Within the next 18 months management expects to complete development of the Phoenix PGM tailings                                100

project. This is a low-risk project with estimated capital requirements of R100-120m.                                                        90

                                                                                                                                             80

                                                                                                                                             70

                                                                                                                                             60

                                                                                                                                             50

                                                                                                                                             40
                                                                                                                                               Dec Mar   Jul    Oct    Feb Jun Sep Jan            Apr Aug Nov
                                                                                                                                                07 08    08     08     09 09 09 10                10 10 10

                                                                                                                                                                      Price relative to country




Strategic analysis                                                            Average SWOT company score:                            4     Production split, FY12

Strengths                                                                                                                            5                         Phoenix
                                                                                                                                                                 9%
High grades at the Barberton mine protect margins when the rand strengthens. PAN is also pursuing several
brownfield exploration opportunities we believe are likely to extend the life of the mine.
Weaknesses                                                                                                                           2
Illegal mining is a substantial problem at Barberton. This appears to have been brought under control in a major                                                                                    Barberton
                                                                                                                                                                                                      91%
crackdown in 2H99, but this problem may recur.
Opportunities                                                                                                                        5     Source: Company data
If the gold bull cycle turns the company will benefit from its exposure to PGMs.
Threats                                                                                                                              3     Market data
The main threats to the company's profitability and sustainability are continued rand strength and a weaker US$
                                                                                                                                           Headquarters
gold price.                                                                                                                                St James's Corporate Services Ltd, 6 St
                                                                                                                                           James's Place, London SW1A 1NP, UK
Scoring range is 1-5 (high score is good)
                                                                                                                                           Website
                                                                                                                                           www.panafricanresources.com
                                                                                                                                           Shares in issue
                                                                                                                                           1409.5m
                                                                                                                                           Freefloat
                                                                                                                                           100%
                                                                                                                                           Majority shareholders
                                                                                                                                           Shanduka Gold (26%), Coronation (17%),
                                                                                                                                           Investec AM (11%)

Country view: South Africa                                                                                                                 Country rel to M East & Africa

The South African economy is underpinned by its mineral wealth, but the rand's volatility tends to make investors                           150

sceptical, so most emerging market fund managers are underweight South Africa. Due to the strong commodity                                  140
sector, flows into the bond and equity markets are improving. South Africa should also benefit from the China
                                                                                                                                            130
growth theme, but we believe more stability in the rand is necessary before an upgrade to Neutral would be
warranted.                                                                                                                                  120

                                                                                                                                            110
The country view is set in consultation with the relevant company analyst but is the ultimate responsibility of the Strategy Team.
                                                                                                                                            100

                                                                                                                                             90
                                                                                                                                               Dec Mar   Jul    Oct    Feb    Jun   Sep Jan       Apr Aug Nov
                                                                                                                                                07 08    08     08     09      09   09 10         10   10 10

                                                                                                                                                                            MarketIndex




Competitive position                                                                       Average competitive score:                4-    Broker recommendations

Supplier power                                                                                                                       3-     6
The dominant positions of suppliers of steel and reagents continue to have an above-inflationary impact on                                  5
operating costs.
                                                                                                                                            4
Barriers to entry                                                                                                                    5+     3
High capital requirements, long lead times in developing projects and increasing difficulty in finding economically                         2
viable resources present extremely high barriers to entry.
                                                                                                                                            1
Customer power                                                                                                                       3-     0
Declining production levels as reserves are depleted and mines become deeper and more mature make the South                                            Sell                  Hold                 Buy
African gold mining industry a less dominant force in the supply chain.
                                                                                                                                           Source: Bloomberg
Substitute products                                                                                                                  3-
Platinum jewellery and alternative consumer products (eg, i-Pods) have replaced the demand for gold jewellery,
exacerbating the impact of high prices and price volatility on demand.
Rivalry                                                                                                                              5-
Competition is fierce in a global race to replace depleted reserves. The player with the lowest operating costs and
highest cash flows has the strongest position.
Scoring range 1-5 (high score is good) Plus = getting better Minus = getting worse




Pan African Resources | Strategic and Competitive Overview | 6 December 2010
Recommendation structure
Absolute performance, short term (trading) recommendation: A Trading Buy recommendation implies upside of 5% or more and a Trading Sell indicates downside of 5% or more. The
trading recommendation time horizon is 0-60 days. For Australian coverage, a Trading Buy recommendation implies upside of 5% or more from the suggested entry price range, and a
Trading Sell recommendation implies downside of 5% or more from the suggested entry price range. The trading recommendation time horizon is 0-60 days.
Absolute performance, long term (fundamental) recommendation: The recommendation is based on implied upside/downside for the stock from the target price and, except as follows,
only reflects capital appreciation. A Buy/Sell implies upside/downside of 10% or more and a Hold less than 10%. For research produced by Nedbank Capital, a Buy implies upside in
excess of 20%, A Sell implies an expected return less than 10%, and a Hold implies a return between 10% and 20%. For UK-based Investment Funds research, the recommendation
structure is not based on upside/downside to the target price. Rather it is the subjective view of the analyst based on an assessment of the resources and track record of the fund
management company. For research produced by Nedbank Capital and for research on Australian listed property trusts (LPT) or real estate investment trusts (REIT), the recommendation
is based upon total return, ie, the estimated total return of capital gain, dividends and distributions received for any particular stock over the investment horizon.
Performance parameters and horizon: Given the volatility of share prices and our pre-disposition not to change recommendations frequently, these performance parameters should be
interpreted flexibly. Performance in this context only reflects capital appreciation and the horizon is 12 months.
Market or sector view: This view is the responsibility of the strategy team and a relative call on the performance of the market/sector relative to the region. Overweight/Underweight implies
upside/downside of 10% or more and Neutral implies less than 10% upside/downside.
Target price: The target price is the level the stock should currently trade at if the market were to accept the analyst's view of the stock and if the necessary catalysts were in place to effect
this change in perception within the performance horizon. In this way, therefore, the target price abstracts from the need to take a view on the market or sector. If it is felt that the catalysts
are not fully in place to effect a re-rating of the stock to its warranted value, the target price will differ from 'fair' value.


Distribution of recommendations
The tables below show the distribution of recommendations (both long term and trading). The first column displays the distribution of recommendations globally and the second column
shows the distribution for the region. Numbers in brackets show the percentage for each category where there is an investment banking relationship. These numbers include
recommendations produced by third parties with which RBS has joint ventures or strategic alliances.



Long term recommendations (as at 03 Dec 2010)                                                        Trading recommendations (as at 03 Dec 2010)

                                         Global total (IB%)          Europe total (IB%)                                                        Global total (IB%)          Europe total (IB%)
Buy                                                     723 (0)                     245 (0)          Trading Buy                                                1 (0)                        0 (0)
Add                                                        0 (0)                       0 (0)         Rec                                                     00 (00)                      00 (00)
Hold                                                    443 (0)                     176 (0)
Reduce                                                     0 (0)                       0 (0)
Sell                                                    112 (0)                       30 (0)         Trading Sell                                               0 (0)                        0 (0)
Total (IB%)                                           1278 (0)                      451 (0)          Total (IB%)                                                1 (0)                        0 (0)
Source: RBS                                                                                          Source: RBS




Valuation and risks to target price
AngloGold Ashanti (RIC: ANGJ J, Rec: Hold, CP: R336.99, TP: R360.00): Our 12-month target price is based on an equally weighted average of five valuation metrics: price to NPV,
price to book, EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple, but reserve the right to make adjustments depending on
where the company is in its life cycle and to bring multiples in line with industry averages. Both up- and down-side risks to our valuation include variations to our currency, gold price,
production and cost assumptions.
DRDGold (RIC: DRDJ.J, Rec: Hold, CP: R3.42, TP: R4.00): Our 12-month target price is based on an equally weighted average of five valuation metrics: price to NPV, price to book,
EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple but reserve the right to make adjustments depending on where the
company is in its life cycle and to bring multiples in line with industry averages. Both up- and downside risks to our valuation include variations to our currency, gold price, production and
cost assumptions.
Gold Fields (RIC: GFIF.J, Rec: Sell, CP: R120.99, TP: R121.00): Our 12-month target price is based on an equally weighted average of five valuation metrics: price to NPV, price to
book, EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple but reserve the right to make adjustments depending on where the
company is in its life cycle and to bring multiples in line with industry averages. Upside and downside risks to our valuation include variations to our currency, gold price, production and
cost assumptions.
Great Basin Gold (RIC: GBGJ.J, Rec: Sell, CP: R20.09, TP: R22.00): Our 12-month target price is based on an equally weighted average of five valuation metrics: price to NPV, price to
book, EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple but reserve the right to make adjustments depending on where the
company is in its life cycle and to bring multiples in line with industry averages. Besides variations to our currency and gold price assumptions, risks to our valuation include the need to
raise further capital.
Harmony Gold (RIC: HARJ.J, Rec: Hold, CP: R80.00, TP: R94.00): Our 12-month target price is based on an equally weighted average of five valuation metrics: price to NPV, price to
book, EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple, but reserve the right to make adjustments depending on where the
company is in its life cycle and to bring multiples in line with industry averages. Both up- and downside risks to our valuation include variations to our currency, gold price, production and
cost assumptions.
Pan African Resources (RIC: PANJ.J, Rec: Buy, CP: R1.09, TP: R1.44): Our 12-month target price is based on an equally weighted average of five valuation metrics: price to NPV,
price to book, EV/EBITDA, price to cash earnings and EV per reserve ounce. We apply a 12-month average as an exit multiple, but reserve the right to make adjustments depending on
where the company is in its life cycle and to bring multiples in line with industry averages. Both up- and downside risks to our valuation include variations to our currency, gold price,
production and cost assumptions.




Gold Mining | Disclosures Appendix | 6 December 2010
AngloGold Ashanti coverage data

Stock performance, recommendations and coverage (as at 3 Dec 2010)                                                                Trading recommendation history
                                                                                                                                  (as at 03 Dec 2010)
                                                                                                                                  Date          Rec     Analyst
                                                                                                                                                n/a
                                                                                                                                  Source: RBS




Christian Siebert started covering this stock on 23 Mar 07. Moved to new recommendation structure between 1 November 2005 and
31 January 2006. Source: RBS




DRDGold coverage data

Stock performance, recommendations and coverage (as at 3 Dec 2010)                                                                Trading recommendation history
                                                                                                                                  (as at 03 Dec 2010)
                                                                                                                                  Date          Rec     Analyst
                                                                                                                                                n/a
                                                                                                                                  Source: RBS




Christian Siebert started covering this stock on 3 Apr 09. Moved to new recommendation structure between 1 November 2005 and 31
January 2006. Source: RBS




Gold Fields coverage data

Stock performance, recommendations and coverage (as at 3 Dec 2010)                                                                Trading recommendation history
                                                                                                                                  (as at 03 Dec 2010)
                                                                                                                                  Date          Rec     Analyst
                                                                                                                                                n/a
                                                                                                                                  Source: RBS




Christian Siebert started covering this stock on 4 Apr 08. Moved to new recommendation structure between 1 November 2005 and 31
January 2006. Source: RBS




Gold Mining | Disclosures Appendix | 6 December 2010
Great Basin Gold coverage data

Stock performance, recommendations and coverage (as at 3 Dec 2010)                                                                 Trading recommendation history
                                                                                                                                   (as at 03 Dec 2010)
                                                                                                                                   Date          Rec     Analyst
                                                                                                                                                 n/a
                                                                                                                                   Source: RBS




Christian Siebert started covering this stock on 20 Jul 07. Moved to new recommendation structure between 1 November 2005 and 31
January 2006. Source: RBS




Harmony Gold coverage data

Stock performance, recommendations and coverage (as at 3 Dec 2010)                                                                 Trading recommendation history
                                                                                                                                   (as at 03 Dec 2010)
                                                                                                                                   Date          Rec     Analyst
                                                                                                                                                 n/a
                                                                                                                                   Source: RBS




Christian Siebert started covering this stock on 14 Sep 07. Moved to new recommendation structure between 1 November 2005 and
31 January 2006. Source: RBS




Pan African Resources coverage data

Stock performance, recommendations and coverage (as at 3 Dec 2010)                                                                 Trading recommendation history
                                                                                                                                   (as at 03 Dec 2010)
                                                                                                                                   Date          Rec     Analyst
                                                                                                                                                 n/a
                                                                                                                                   Source: RBS




Christian Siebert started covering this stock on 27 Feb 09. Moved to new recommendation structure between 1 November 2005 and
31 January 2006. Source: RBS




Gold Mining | Disclosures Appendix | 6 December 2010
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____________________________________________________________________________________________________________________________________________________
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____________________________________________________________________________________________________________________________________________________
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Gold Mining | Disclosures Appendix | 6 December 2010
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nor have any other significant financial or material interest and may have conducted investment banking business in the last 12-months or may do so in the next 6-months.



Share price, ratings and 12-month forward price target (ZAc)                                                                         Nedbank Capital’s ratings universe

 410                                                                                                                                  25



 360                                                                                                                                  20



 310                                                                                                                                  15



 260                                                                                                                                  10



 210                                                                                                                                   5



 160       H                         S      H      B                             H       S          H            165          165      0
    Jan-   Apr -   Jul-   Oct-     Jan-    Apr-     Jul-   Oct-   Jan -   Apr-   Jul -       Oct-       Jan-   Apr-    Jul-   Oct-               Buy           Hold        Sel l
     07     07      07     07       08      08      08      08     09     09     09          09          10     10     10      10

                                 An glo Go ld Ash anti              12-month targ et price


Source: Nedbank Capital                                                                                                              Source: Nedbank Capital




Gold Mining | Disclosures Appendix | 6 December 2010
Share price, ratings and 12-month forward price target (ZAc)                                                                                                  Nedbank Capital’s ratings universe

 12                                                                                                                                                               25


 10
                                                                                                                                                                  20


  8
                                                                                                                                                                  15

  6
                                                                                       S                                     B                      5             10

  4

                                                                                                                                                                  5
  2

                                                                                                                                                                  0
  0
                                                                                                                                                                           Sell          Hold   Buy
   Jan-      Apr-    Jul-     Oct-    Ja n-     Ap r-     Jul-    Oct-    Ja n-       Apr-       Jul-       Oct-     Ja n-       Apr-    Ju l-      Oct-
    07        07      07      07       08        08       08      08       09          09        09         09        10          10      10        10
                                       DRDGold                             12-mont h target price



Source: Nedbank Capital                                                                                                                                       Source: Nedbank Capital




Share price, ratings and 12-month forward price target (ZAc)                                                                                                Nedbank Capital’s ratings universe

 210                                                                                                                                                         25

 190
                                                                                                                                                             20
 170

 150
                                                                                                                                                             15

 130

                                                                                                                                                             10
 110

 90
                                                                                                                                                              5
 70

                                                 B        H                     B                              H      B                           55          0
 50
      Jan-    Apr-    Jul -    Oct-    Jan-     Apr-      Jul-    Oct-    Jan-        Ap r-     Jul-       Oct-     Jan-     Apr-       Jul-      Oct-                  Sel l           Hold    Buy
       07     07       07      07       08       08        08      08      09          09       09          09       10       10         10        10
                                       Go ld F ields                       12 -m ont h t arget price



Source: Nedbank Capital                                                                                                                                     Source: Nedbank Capital




Share price, ratings and 12-month forward price target (ZAc)                                                                                                  Nedbank Capital’s ratings universe
 40                                                                                                                                                               25

 35
                                                                                                                                                                  20
 30

 25
                                                                                                                                                                  15

 20

                                                                                                                                                                  10
 15

 10
                                                                                                                                                                  5
 5                    B                                                                                                                                 5

 0                                                                                                                                                                0
  Jan-       Apr-    Jul-     Oct-    Jan-    Apr-      Jul-     Oct-    Jan-       Apr-      Jul-      Oct-       Jan-    Apr-     Jul-         Oct-                      Sell          Hold   Buy
   07        07      07       07       08      08       08       08       09         09       09        09          10     10        10          10
                                      G re at B asi n G old                     12-mo nth ta rge t price



Source: Nedbank Capital                                                                                                                                       Source: Nedbank Capital




Gold Mining | Disclosures Appendix | 6 December 2010
Share price, ratings and 12-month forward price target (ZAc)                                                                                     Nedbank Capital’s ratings universe

 140                                                                                                                                              25
 130

 120
                                                                                                                                                  20

 110
                                                                                                                                                  15
 100

  90                                                                                                                                              10

  80

  70
                                                                                                                                                  5

  60
                               H                   S                                     H                                                        0
  50                                                                                                                                                        Sel l          Hold   Buy
    Jan-     Apr-     Jul -     Oct-     Ja n-    Apr-     Jul -    Oct-    Jan -      Ap r-    Jul-    Oct-    Jan-    Ap r-    Ju l-    Oct-
     07      07        07       07        08      08        08       08      09         09      09       09      10      10       10       10

                                              Harmony                         12-m ont h t arget pric e



Source: Nedbank Capital                                                                                                                          Source: Nedbank Capital




Share price, ratings and 12-month forward price target (ZAc)                                                                                     Nedbank Capital’s ratings universe

 6                                                                                                                                                25


 5                                                                                B                                                               20


 4
                                                                                                                                                  15


 3
                                                                                                                                                  10

 2
                                                                                                                                                   5

 1

                                                                                                                                                   0
 0                                                                                                                                                          Buy            Hold   Sel l
  Jan-     Apr-     Jul-      Oct-     Jan-      Apr-    Ju l-     Oct-    Jan-       Apr-     Jul-    Oct-    Jan-    Apr-     Jul -    Oct-
   07       07      07        07        08       08       08       08       09         09       09      09      10      10       10       10

                                       Pan Afri can Re sources                    12-mo nth targe t price


Source: Nedbank Capital                                                                                                                          Source: Nedbank Capital




Gold Mining | Disclosures Appendix | 6 December 2010
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