20-F 1 drdgold202320-f.htm 20-F Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-28800
DRDGOLD LIMITED
(Exact name of Registrant as specified in its charter and translation of Registrant's name into English)
REPUBLIC OF SOUTH AFRICA
(Jurisdiction of incorporation or organization)
Constantia Office Park Cnr 14th Avenue and Hendrik Potgieter Road Cycad House, Building 17, Ground Floor, Weltevreden Park, 1709, South Africa
 (Address of principal executive offices)
Riaan Davel, Chief Financial Officer, Tel. no.+27 11 470 2600, Email riaan.davel@drdgold.com
Mpho Mashatola, Group Financial Manager Tel. no. +27 11 470 2600, Email mpho.mashatola@drdgold.com
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act
Title of each class:Trading symbolName of each exchange on which registered:
American Depositary Shares, each representing ten ordinary shares
DRD
New York Stock Exchange
Ordinary shares
New York Stock Exchange*
* Not for trading, but only in connection with the registration of the American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act None
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.         864,588,711 ordinary shares of no par value outstanding as of June 30, 2023.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes No 
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  Accelerated filer  Non-accelerated filer  Emerging growth company 
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing. U.S. GAAP International Financial Reporting Standards as issued by the International Accounting Standards Board Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17  Item 18 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes No 



TABLE OF CONTENTS
Page
PART I



TABLE OF CONTENTS
Page
PART II
PART III



Preparation of Financial Information

    We are a South African company and currently all our operations are located in South Africa. Accordingly, our books of account are maintained in South African Rand. Our financial statements included in our corporate filings are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

    Our consolidated financial statements included in this Annual Report are prepared in accordance with IFRS as issued by the IASB. All financial information in this Annual Report, except as otherwise noted is prepared in accordance with IFRS as issued by the IASB.

    We present our financial information in rand, which is our presentation and reporting currency. All references to “dollars” or “$” herein are to United States Dollars and references to “rand” or “R” are to South African rands. Solely for your convenience, this Annual Report contains translations of certain rand amounts into dollars at specified rates. These rand amounts do not represent actual dollar amounts, nor could they necessarily have been converted into dollars at the rates indicated. Unless otherwise indicated, rand amounts have been translated into dollars at the rate of R18.83 per $1.00, the year end exchange rate on June 30, 2023.

    In this Annual Report, we present certain non-IFRS financial measures including "Adjusted EBITDA", "cash operating costs", “cash operating costs per kilogram”, "all-in sustaining costs", “all-in sustaining costs per kilogram”, "all-in costs", “all-in costs per kilogram”, "growth capital expenditure" and "sustaining capital expenditure". The non-IFRS measures "cash operating costs", “cash operating costs per kilogram”, "all-in sustaining costs", “all-in sustaining costs per kilogram”, "all-in costs" and “all-in costs per kilogram” have been determined using industry guidelines promulgated by the World Gold Council, and are used to determine costs associated with producing gold, cash generating capacities of the mines and to monitor the performance of our mining operations. An investor should not consider these items in isolation or as alternatives to, operating costs, cash generated from operating activities, profit/(loss) for the year or any other measure of financial performance presented in accordance with IFRS or as an indicator of our performance. While the World Gold Council has provided definitions for the calculation of these measures, the calculation of cash operating costs per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram may vary significantly among gold mining companies, and these definitions by themselves do not necessarily provide a basis for comparison with other gold mining companies. See Glossary of Terms and Explanations and Item 5A. Operating Results – “Cash operating costs, all-in sustaining costs and all-in costs” and “Reconciliation of cash operating costs per kilogram, all-in sustaining costs per kilogram, all-in costs per kilogram”.

DRDGOLD Limited

    When used in this Annual Report, the term the “Company” refers to DRDGOLD Limited and the terms “we,” “our,” “us” or “the Group” refer to the Company and its subsidiaries as appropriate in the context.

Special Note Regarding Forward-Looking Statements

    This Annual Report contains certain “forward-looking” statements within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, regarding expected future events, circumstances, trends and expected future financial performance and information relating to us that are based on the beliefs of our management, as well as assumptions made by and information currently available to our management. Some of these forward-looking statements include phrases such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “should,” or “will continue,” or similar expressions or the negatives thereof or other variations on these expressions, or similar terminology, or discussions of strategy, plans or intentions, including statements in connection with, or relating to, among other things:
our reserve calculations and underlying assumptions;
the trend information discussed in Item 5D.- Trend Information, including target gold production and cash operating costs;
life of mine and potential increase in life of mine;
statements made in or with respect to the Technical Report Summaries (“TRS” or “TRSs”) including statements with respect to Mineral Reserves and Resources and assumptions, gold prices, projected revenue and cash flows and capital expenditures and other forward looking statements in the TRSs;
estimated future throughput capacity and production;
expected trends in our gold production as well as the demand for and the price of gold;
our anticipated labor, electricity, water, crude oil and steel costs;
our expectation that existing cash will be sufficient to fund our operations in the next 12 months including our anticipated commitments;
estimated production costs, cash operating costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce;
expectations on future gold price, supply and pricing trends, including long term trends, expected impact of the global environment on gold prices;
expected gold production and cash operating costs expected in fiscal year 2024;
statements with respect to agreements with unions;
our prospects in litigation and disputes;
statements with respect to the legal review for increasing the deposition capacity of the Brakpan/Withok Tailings Storage Facility (“Brakpan/Withok TSF”) and the Regional Tailings Storage Facility (“RTSF”), and expected potential increase in capacity and life of mine;
statements with respect to the Solar Power Project (“Solar Plant”) being developed by Ergo, and the Flotation Fine Grind program ("FFG");
expected deposition capacity from improvements in our dams and new tailings facility construction; and
expected effective gold mining tax rate.    

    Such statements reflect our current views with respect to future events and are subject to risks, uncertainties and assumptions. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others:
the global impact of the COVID-19 pandemic and potential new variants, including in South Africa;
the global impact of Ukraine conflict and global inflation;
the global impact of the Israel-Palestine conflict;
adverse changes or uncertainties in general economic conditions in South Africa;
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The future of power security from South Africa's power utility and intensity of load shedding
regulatory developments adverse to us or difficulties in maintaining necessary licenses or other governmental approvals;
future performance relating to the Far West Gold Recoveries ("FWGR") Phase 2 assets and the reclamation sites on the east of Ergo’s plant;
challenges in replenishing mineral reserves;
changes in our competitive position;
changes in, or that affect, our business strategy;
that assumptions underlying our Mineral Reserves and Mineral Resources as set forth in this report and our TRSs prove to be incorrect;
our ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions;
the success of our business strategy, development activities and other initiatives;
adverse changes in our gold production as well as the demand for and the price of gold;
changes in technical and economic assumptions underlying our Mineral Reserve estimates;
any major disruption in production at our key facilities;
adverse changes in foreign exchange rates;
adverse environmental or environmental regulatory changes;
adverse changes in ore grades and recoveries, and to the quality or quantity of reserves;
unforeseen technical production issues, industrial accidents and theft;
anticipated or unanticipated capital expenditure on property, plant and equipment;
the impact of HIV/AIDS, tuberculosis and the spread of other contagious diseases such as COVID-19; and
various other factors, including those set forth in Item 3D. Risk Factors.

    For a discussion of such risks, see Item 3D. Risk Factors. The risk factors described above and in Item 3D. could affect our future results, causing these results to differ materially from those expressed in any forward-looking statements. These factors are not necessarily all of the important factors that could cause our results to differ materially from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results.

    Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. We do not undertake any obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.

Special Note Regarding Websites

    References in this document to information on websites (and/or social media sites) are included as an aid to their location and such information is not incorporated in, and does not form part of, this annual report. Any links to external, or third-party websites, are provided solely for convenience. We take no responsibility whatsoever for any third-party information contained in such third-party websites, and we specifically disclaim adoption or incorporation by reference of such information into this report and no websites are incorporated by reference into this report.


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Imperial units of measure and metric equivalents

    The table below sets forth units stated in this document, which are measured in Imperial and Metric.

MetricImperialImperialMetric
1 metric tonne1.10229 short tons1 short ton0.9072 metric tonnes
1 kilogram2.20458 pounds1 pound0.4536 kilograms
1 gram0.03215 troy ounces1 troy ounce31.10353 grams
1 kilometer0.62150 miles1 mile1.609 kilometers
1 meter3.28084 feet1 foot0.3048 meters
1 liter0.26420 gallons1 gallon3.785 liters
1 hectare2.47097 acres1 acre0.4047 hectares
1 centimeter0.39370 inches1 inch2.54 centimeters
1 gram/tonne0.0292 ounces/ton1 ounce/ton34.28 grams/tonnes
0 degree Celsius32 degrees Fahrenheit0 degrees Fahrenheit- 18 degrees Celsius
Glossary of Terms and Explanations
The table below sets forth a glossary of terms used in this Annual Report:
Adjusted EBITDAAdjusted EBITDA means earnings before interest, tax, depreciation, amortisation, share-based payment (benefit)/expense, change in estimate of environmental rehabilitation recognised in profit or loss, gain/(loss) on disposal of property, plant and equipment, gain/(loss) on financial instruments, IFRS 16 lease payments, exploration expenses and transaction costs, and retrenchment costs. This is a non-IFRS financial measure and should not be considered a substitute measure of net income reported by us in accordance with IFRS.
Administration expenses and other costs excluding non-recurring itemsAdministration expenses and other costs excluding loss on disposal of property, plant and equipment and transaction costs.
All-in sustaining costsAll-in sustaining costs is a measure on which guidance is provided by the World Gold Council and includes cash operating costs of production, plus movement in gold in process on a sales basis, corporate administration expenses and other (costs)/income, the accretion of rehabilitation costs and sustaining capital expenditure. Costs other than those listed above are excluded. All-in sustaining costs per kilogram are calculated by dividing total all-in sustaining costs by kilograms of gold produced. This is a non‑IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
All-in costsAll-in costs is a measure on which guidance is provided by the World Gold Council and includes all-in sustaining costs, retrenchment costs, care and maintenance costs, ongoing rehabilitation expenditure, growth capital expenditure and capital recoupments. Costs other than those listed above are excluded. All-in costs per kilogram are calculated by dividing total all-in costs by kilograms of gold produced. This is a non‑IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
AssayingThe chemical testing process of rock samples to determine mineral content.
Brakpan/Withok final life design
The Brakpan/Withok Tailings Storage Facility final life design is the engineering design that ultimately brings the tailings storage facility to its finality in terms of extent, operation, rehabilitation and management. The implemented final design would result in alignments with the Global Industry Standard on Tailings Management (“GISTM”) and regulatory bodies, increase deposition capacity, improve operation/management and bring about the sustainable closure of the facility.
$/ozUS dollar per ounce.
Called gold contentThe theoretical gold content of material processed.
Care and maintenance costsCosts to ensure that the Ore Reserves are open, serviceable and legally compliant after active mining activity at a shaft has ceased.
Cash operating costsCash operating costs of production are operating costs less ongoing rehabilitation expenses, care and maintenance costs and net other operating costs/(income). This is a non‑IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
Cash operating costs per kilogramCash operating costs are operating costs incurred directly in the production of gold and include labor costs, contractor and other related costs, inventory costs and electricity costs. Cash operating costs per kilogram are calculated by dividing cash operating costs by kilograms of gold produced. This is a non‑IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
Cut‑off gradeThe grade (i.e., the concentration of metal or mineral in rock) that distinguishes material deemed to have no economic value from material deemed to have economic value.
CIL CircuitCarbon-in-leach circuit.
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Definitive Feasibility Study ("DFS")
A definitive engineering estimate of all costs, revenues, equipment requirements and production at a -5% to +10% level of accuracy. The study is used to define the economic viability of a project and to support the search for project financing.
DepletionThe decrease in the quantity of ore in a deposit or property resulting from extraction or production.
DepositionDeposition is the geological process by which material is added to a landform or land mass. Fluids such as wind and water, as well as sediment flowing via gravity, transport previously eroded sediment, which, at the loss of enough kinetic energy in the fluid, is deposited, building up layers of sediment. Deposition occurs when the forces responsible for sediment transportation are no longer sufficient to overcome the forces of particle weight and friction, creating a resistance to motion.
DilutionWaste or material below the cut-off grade that contaminates the ore during the course of mining operations and thereby reduces the average grade mined.
DoréUnrefined gold and silver bullion bars consisting of approximately 90% precious metals which will be further refined to almost pure metal.
FootwallThe underlying side of a stope or ore body.
GradeThe amount of gold contained within auriferous material generally expressed in ounces per ton or grams per tonne of ore.
Growth capital expenditureCapital additions that are not sustaining capital expenditure. This is a non‑IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
g/tGrams per tonne.
Indicated Mineral ResourcesThat part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an indicated Mineral Resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an indicated Mineral Resource has a lower level of confidence than the level of confidence of a measured Mineral Resource, an indicated Mineral Resource may only be converted to a probable Mineral Reserve.
Inferred Mineral ResourcesThat part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The level of geological uncertainty associated with an inferred Mineral Resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an inferred Mineral Resource has the lowest level of geological confidence of all Mineral Resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an inferred Mineral Resource may not be considered when assessing the economic viability of a mining project and may not be converted to a Mineral Reserve.
Measured Mineral ResourcesThat part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured Mineral Resource is sufficient to allow a qualified person to apply modifying factors, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured Mineral Resource has a higher level of confidence than the level of confidence of either an indicated Mineral Resource or an inferred Mineral Resource, a measured Mineral Resource may be converted to a proven Mineral Reserve or to a probable Mineral Reserve.
Metallurgical plantA processing plant (mill) erected to treat ore and extract the contained gold.
Mineral ReservesAn estimate of tonnage and grade or quality of indicated and measured Mineral Resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, the economically mineable part of a measured or indicated Mineral Resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.
Mineral ResourcesA concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A Mineral Resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.
Mine call factorThe gold content recovered expressed as a percentage of the called gold content.
Modifying factorsThe factors that a qualified person must apply to indicated and measured Mineral Resources and then evaluate in order to establish the economic viability of Mineral Reserves. A qualified person must apply and evaluate modifying factors to convert measured and indicated Mineral Resources to proven and probable Mineral Reserves. These factors include, but are not restricted to: Mining; processing; metallurgical; infrastructure; economic; marketing; legal; environmental compliance; plans, negotiations, or agreements with local individuals or groups; and governmental factors. The number, type and specific characteristics of the modifying factors applied will necessarily be a function of and depend upon the mineral, mine, property, or project
MtMillion tons.
OreA mixture of valuable and worthless materials from which the extraction of at least one mineral is technically and economically viable.
Other operating costs / (income)Expenses incurred, and income generated in the course of operating activities, which are not directly attributable to production activities.
Operating costsOperating costs are cost of sales less depreciation, change in estimate of rehabilitation provision, movement in gold in process and finished inventory – gold bullion, ongoing rehabilitation expenditure, care and maintenance, other operating income and retrenchment costs.
oz/tOunces per ton.
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Prefeasibility study ("PFS")
A comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the modifying factors and the evaluation of any other relevant factors which are sufficient for a competent person, acting reasonably, to determine if all or part of the Mineral Resource may be converted to a Mineral Reserve at the time of reporting. A prefeasibility study is at a lower confidence level than a feasibility study.
Proven Mineral ReservesThe economically mineable part of a measured Mineral Resource and can only result from conversion of a measured Mineral Resource and can only result from conversion of a measured Mineral Resource.
Probable Mineral ReservesThe economically mineable part of an indicated and in some cases, a measured Mineral Resource.
Qualified PersonAn individual who is a mineral industry professional with at least 5 years of relevant experience in the type of mineralization and type of deposit under consideration and in the specific type of activity that person is undertaking on behalf of the registrant, and an eligible member or licensee in a good standing of a recognized professional organization at the time the technical report is prepared.
RefiningThe final purification process of a metal or mineral.
RehabilitationThe process of restoring mined land to a condition approximating its original state.
ReservesThat part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
SedimentThe deposition of solid fragmental material that originated from weathering of rocks and was transported from a source to a site of deposition.
SlimesThe tailings discharged from a processing plant after the valuable minerals have been recovered.
Sustaining capital expenditureSustaining capital expenditure are those capital additions that are necessary to maintain current gold production. This is a non‑IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
T’000Tonnes in thousands.
TailingsFinely ground rock from which valuable minerals have been extracted by milling, or any waste rock, slimes or residue derived from any mining operation or processing of any minerals.
Tailings facility
A dam created from waste material of processed ore after the economically recoverable gold has been extracted.
Tonnage/TonneQuantities where the metric tonne is an appropriate unit of measure. Typically used to measure reserves of gold‑bearing material in‑situ or quantities of ore and waste material mined, transported or milled.
TpmTonne per month.
YieldThe amount of recovered gold from production generally expressed in ounces or grams per ton or tonne of ore.
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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

    Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

    Not applicable.

ITEM 3. KEY INFORMATION

3A. [Reserved]

3B. CAPITALIZATION AND INDEBTEDNESS
    Not applicable.


3C. REASONS FOR THE OFFER AND USE OF PROCEEDS
    Not applicable.


3D. RISK FACTORS
    In conducting our business, we face many risks that may interfere with our business objectives. Some of these risks relate to our operational processes, while others relate to our business environment. It is important to understand the nature of these risks and the impact they may have on our business, financial condition and operating results. Some of these risks are summarized below and have been organized into the following categories:
Risks related to our business and operations;
Risks related to the gold mining industry;
Risks related to doing business in South Africa;
Risks related to Environmental, Social and Governance (ESG) performance including climate change;
Risks related to government regulation; and
Risks related to ownership in our ordinary shares or American Depositary Shares (ADSs).

Risks related to our business and operations

Changes in the market price for gold and exchange rate fluctuations, both of which have fluctuated widely in the past, affect the profitability of our operations and the cash flows generated by those operations.

Our results are significantly impacted by the price of gold and the USD-rand exchange rate. Any sustained decline in the market price of gold from the current levels would adversely affect us, and any sustained decline in the price of gold below the cost of production could result in the closure of some or all of our operations which would result in significant costs and expenditure, such as, incurring retrenchment costs earlier than expected which could lead to a decline in profits, or losses, as well as impairment losses. In addition, as most of our production costs are in rands, while gold is sold in dollars and then converted to rands, our results of operation and financial condition have been and could be in the future materially affected by an appreciation in the value of the rand. Accordingly, any sustained decline in the dollar price of gold and/or the strengthening of the South African rand against the dollar would negatively and adversely affect our business, operating results and financial condition.

Although the impact of the COVID-19 pandemic has diminished and gold prices have marginally decreased, the average gold price for fiscal year 2022 remained high due to continued economic uncertainty as the global economies attempt to recover from all the after effects of COVID19 and deal with, the conflict in Ukraine and rapidly rising inflation. As US inflation started to recover there was uncertainty whether the US Federal Reserve would halt interest rate hikes and the collapsing of Silicon Valley Bank meant that gold remained a safe haven for investors which kept the gold price high in fiscal year 2023. In addition, we are impacted by movements in the exchange rate of the rand against the dollar as described below.

    Exchange rates are influenced by global economic trends. The closing exchange rate of the rand against the dollar at June 30, 2023 weakened by 16% compared to June 30, 2022. The closing price of the rand against the dollar at June 30, 2022 weakened by 14% compared to June 30, 2021. At September 30, 2023, the rand traded at R18.92 = $1.00 (based on closing rates), within 1% of the rand against the dollar from June 30, 2023 as the dollar remained strong as a result of continued quantitative tightening and the raising of interest rates by the US Federal Reserve and with continued power supply struggles from Eskom Holdings SOC Limited (“Eskom”). The rand/dollar exchange rate was volatile throughout the fiscal year 2023 mainly as a result of global, emerging market and South Africa economic uncertainty including uncertainties resulting from the global economic slowdown sentiment, rapidly rising global inflation, continued geopolitical tensions in Ukraine, perceived political and economic instability, structurally weak economic growth of the South African economy exacerbated by increasing loadshedding by power utility Eskom as it battles with supply.

    A decrease in the dollar gold price and/or a strengthening of the rand against the dollar results in a decrease in our profitability. If the rand was to appreciate against the dollar or the gold price were to decrease for a continued time, our operations could experience a reduction in cash flow and profitability, and this would adversely affect our business, operating results and financial condition.

6


    We typically do not enter into forward contracts to reduce our exposure to market fluctuations in the dollar gold price or the exchange rate movements of the rand. Up to April 11, 2022 we sold gold at spot prices based on the afternoon London Bullion Market fixing price on the day when Rand Refinery, acting as an agent for the sale of all gold produced by the Group, delivers the Gold to the buyer. Our foreign currency was usually sold at the spot price in the market on the date of trade. Subsequent to April 11, 2022 gold is sold at a dollar gold price and spot exchange rate specified in a contract with the South African bullion banks to deliver the gold at a specified settlement date. If the dollar gold price should fall and/or the rand should strengthen against the dollar, this would adversely affect us, and we may experience losses, and if these changes result in revenue below our cost of production and remain at such levels for any sustained period, we may be forced to curtail or suspend some or all our operations.

A failure to acquire new Mineral Reserves could negatively affect our future cash flows, results of operations and financial condition.

New or ongoing exploration programs may be delayed or may not result in new mineral producing operations that will sustain or increase our Mineral Reserves. A failure to acquire new Mineral Reserves in sufficient quantities and quality to maintain or grow the current level and quality of our reserves will negatively affect our future cash flow, results of operations and financial condition. In addition, if we are unable to identify Mineral Reserves that have reasonable prospects for economic extraction while maintaining sufficient controls on production and other costs, this will have a material effect on the future viability of our operations.

    If we are not successful in increasing reserves in future years, our reserves could decrease, and such reduction would adversely affect our business, operating results and financial condition.

    We may be unable to make desirable acquisitions or to integrate successfully any businesses we acquire, including the development of Phase 2 of the FWGR assets acquired from Sibanye-Stillwater.

    Our future success may depend in part on the acquisition of businesses or technologies intended to complement, enhance or expand our current business or products or that might otherwise offer us growth opportunities. Our ability to complete such transactions may be hindered by a number of factors, including identifying acquisition targets, obtaining necessary financing and potential difficulties in obtaining government approvals. Any acquisitions we make, could fail to achieve our financial or strategic objectives or disrupt our ongoing business which could adversely impact our results of operations.

    Any acquisition that we do make would pose risks related to the integration of the new business or technology with our business and organization. We cannot be certain that we will be able to achieve the benefits we expect from a particular acquisition or investment. Acquisitions may also strain our managerial and operational resources, as the challenge of managing new operations may divert our management from day-to-day operations of our existing business. Furthermore, we may have difficulty integrating employees, business systems, and technology. The controls, processes and procedures of acquired businesses may also not adequately ensure compliance with laws and regulations and we may fail to identify compliance issues or liabilities. Our business, financial condition and results of operations may be materially and adversely affected if we fail to coordinate our resources effectively to manage both our existing operations and any businesses we acquire. Acquisitions can also result in unforeseen liabilities.

    Moreover, our resources are limited and our decision to pursue a transaction has opportunity costs; accordingly, if we pursue a particular transaction, we may need to forgo the prospect of entering into other transactions that could help us achieve our financial or strategic objectives.

Limited deposition capacity

Our operations are based on ultra-volume and almost nano-gold extraction. The volume of reclaimed material delivered has one of the most profound impacts on the gold output of our metallurgical plants. The large volumes of material that are processed at our operations are deposited on tailings facilities which have a finite capacity. Alternative facilities will be required to ensure adequate deposition capacity for the current life of mine and for the future. Key projects to increase such a deposit capacity include the development of the RTSF as part of Phase 2 FWGR project, as well as obtaining regulatory approvals for the Brakpan/Withok final life design at Ergo to expand its deposition capacity. The timing to have the new facilities on line is critical as a delay may result in reduced deposition rates or a halt in deposition which will have an adverse financial impact on the business.

    Our large projects, most notably the development of FWGR Phase 2, the Solar Plant and Brakpan/Withok final life design implementation to enable mining on the east of the Ergo plant, are subject to schedule delays and cost overruns, and we may face constraints in financing our existing projects or new business opportunities, which could render our projects unviable or less profitable than planned.

    The development of our projects are capital intensive processes carried out over long durations and requires us to commit significant capital expenditure and allocate considerable management resources in utilizing our existing experience and know-how.

    Projects like the development of Phase 2 of the FWGR assets acquired from Sibanye-Stillwater, the Solar Plant and the implementation of the Brakpan/Withok final life design are subject to the risk of delays, regulatory approvals and cost overruns which are inherent in any large construction project including, inter alia:
•    unforeseen increases in the cost of equipment, labor and raw materials;
•    delays or disruptions in the supply of equipment and raw materials
•    unforeseen design and engineering problems;
•    changes in construction plans that may require new or amended planning permissions;
•    unforeseen construction problems;
•    unforeseen delays commissioning sections of the project;
•    inadequate phasing of activities;
•    labor disputes and social challenges;
• security issues
•    inadequate workforce planning or productivity of workforce;
•    inadequate management practices;
•    natural disasters and adverse weather conditions;
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•    national work stoppages as a result of infectious deceases and pandemics;
•    failure or delay of third-party service providers; and
•    changes to regulations, such as environmental regulations.

        We also face the risk that expected benefits of our projects are not achieved.

        The regulatory approval for the build of the RTSF is in progress. It is therefore anticipated that the construction of the RTSF, related to Phase 2, will commence in fiscal year 2024. A delay may result in deposition capacity to be reduced as the Driefontein 4 TSF is expected to reach capacity during fiscal year 2026, whereafter the depositional rate would have to decrease materially.
        
        Ergo is currently developing a Solar Power Project to reduce its reliance on Eskom and to reduce its future cost of electricity. The Solar Plant definitive feasibility study was completed during fiscal year 2022 and is currently under development. A significant capital investment is needed to complete the project and the purchase of imported solar panels and battery energy storage system subject to fluctuations in the USD and euros to the rand exchange rate. It is estimated that benefit from the project in reduced electricity costs and reduced carbon footprint will start to materialise toward the end of fiscal year 2024.
        
        Regulatory approvals for the final life design of the Brakpan/Withok TSF are yet to be obtained. The implementation of the final life design is expected to be crucial to sustain and increase the life of mine of Ergo as it will accommodate material in toward the east of the Ergo plant.

    In addition, if the assumptions we make in assessing the viability of our projects, including those relating to commodity prices, exchange rates, interest rates, inflation rates and discount rates, prove to be incorrect or need to be significantly revised, this may adversely affect the profitability or even the viability of our projects. The uncertainty and volatility in the gold market makes it more difficult to accurately evaluate the project economics and increases the risk that the assumptions underlying our assessment of the viability of the project may prove incorrect.

    As the development of FWGR, the Solar Power Project and the implementation of the Brakpan/Withok TSF final life design are particularly material to DRDGOLD, significant cost overruns or adverse changes in assumptions affecting the viability of these projects could have a material adverse effect on our business, cash flows, financial condition and prospects.

    Our operating cash flow and available banking facilities may be insufficient to meet our capital expenditure plans and requirements, depending on the timing and cost of development of our existing projects and any further projects we may pursue. As a result, new sources of capital may be needed to meet the funding requirements of these projects and to fund ongoing business activities. Our ability to raise and service significant new sources of capital will be a function of, inter alia, macroeconomic conditions, rising cost of debt, our credit rating, our gearing and other risk metrics, the condition of the financial markets, future gold prices, the prospects for our industry, our operational performance and operating cash flow and debt position. Inability to raise these funds may place a burden on the Group cash reserves.

    In the event of operating or financial challenges, any dislocation in financial markets or new funding limitations, our ability to pursue new business opportunities, invest in existing and new projects, fund our ongoing business activities and pay dividends, could be constrained, any of which could have a material adverse effect on our business, operating results, cash flows and financial condition.

    We may not be able to meet our cash requirements because of a number of factors, many of which are beyond our control.

    Management’s estimates on future cash flows are subject to risks and uncertainties, such as the rand gold price, production volumes, recovered grades and costs. Management is estimating a significant capital investment in major projects in the next few years. If we are unable to meet our cash requirements out of cash flows generated from our operations, we would need to fund our cash requirements from financing sources and any such financing may not be permitted under the terms of our financing arrangements or may not be possible on attractive terms or at all due to rising interest rates, or may not be available on acceptable terms, or at all. If we do not generate sufficient cash flows or have access to adequate financing, our ability to respond to changing business and economic conditions, make future acquisitions, react to adverse operating results, meet our debt service obligations and fund required capital expenditures or meet our working capital requirements may be adversely affected.

    Any interruption in gold production at any of our two mining operations generating cash flows, will have an adverse effect on the Company.

    We have two mining operations generating cash flows, namely Ergo and FWGR. Ergo’s reclamation sites, processing plants, pump stations and the Brakpan/Withok tailings facilities are linked through pipeline infrastructure. The Ergo plant is currently our major processing plant. FWGR’s reclamation sites, DP2 processing plant, pump stations and the Driefontein 4 Tailings Storage Facility are linked through pipeline infrastructure.
    
    Our reclamation sites, plants, pipelines infrastructure and the tailings storage facilities are exposed to numerous risks, including operational down time due to planned or unplanned maintenance and load shedding or power dips, adverse weather, destruction of infrastructure, spillages, higher than expected operating costs, or lower than expected production as a result of decreases in extraction efficiencies due to imbalances in the metallurgical process as well as inconsistent volume throughput or other factors.

    Our FWGR operations are reliant on the use and access to Sibanye-Stillwater Limited’s ("Sibanye-Stillwater") mining infrastructure, related services including the smelting and recovery of gold from gold loaded carbon produced at FWGR as well as the use of various rights, permits and licenses held by Sibanye Gold Proprietary Limited (wholly owned subsidiary of Sibanye-Stillwater) pursuant to which FWGR operates, pending the transfer to FWGR of those that are transferable. Any disruption in the supply of, or our ability to use and access the Sibanye-Stillwater mining infrastructure, related services and rights, permits and licenses, could have an adverse impact on our operations.

    Any of the risks above or other interruptions could adversely impact our operations which could have a material adverse effect on our business, operating results and financial condition.


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    Flooding at our discontinued underground operations may cause us to incur liabilities for environmental damage.

    If the rate of rise of water is not controlled, water from our discontinued underground mining areas and active tailings storage facilities (TSFs) could potentially rise and come into contact with naturally occurring underground water or decant into surrounding underground mining areas, active TSFs and could ultimately also rise to surface. Progressive flooding of these abandoned underground mining areas and surrounding underground mining areas could eventually cause the discharge of polluted water to the surface and to local water sources.

    This may lead us to face claims and liability relating to environmental damage and liability for breaches, or alleged breaches, of applicable laws (see also Our operations are subject to extensive environmental regulations which could impose significant costs and liabilities). Any such claims may have a material adverse effect on our business, operating results and financial condition.

An increase in production costs could have an adverse effect on our results of operations.
    
    An increase in our production costs will impact our results of operations. Production costs are affected by, inter alia:
• rising global and national inflation;
• labor stability, productivity and increases in labor costs;
• increases in electricity and water prices;
• increases in crude oil and steel prices;
• increases in security measures to protect our employees and infrastructure;
• changes in regulation;
• unforeseen changes in ore grades and recoveries;
• unexpected changes in the quality or quantity of reserves;
• technical production issues;
• availability and cost of smelting and refining arrangements;
• environmental and industrial accidents;
• gold theft;
• shortages or availability of materials used in production;
• environmental factors; and
• pollution.

Our production costs consist mainly of materials including reagents and steel, labor, electricity, specialized service providers, machine hire, security, water, fuels, lubricants and other oil and petroleum-based products. Production costs have in the past, and could in the future, increase at rates in excess of our annual inflation rate and impact our results of operation and can result in the restructuring of these operations at substantial cost.
    
    A three-year wage agreement was reached with organized labor at FWGR in November 2021 and Ergo reached a three-year wage agreement with organized labor with effective from 1 July 2022.

    Increases in production costs, if material, will adversely impact our results of operations. In addition, any initiatives that we pursue to reduce costs, such as reducing our reliance on Eskom’s grid through self-generation of power, for example through the Solar Power Project at Ergo, reducing our labor force, a reduction of the corporate overhead, negotiating lower price increases for consumables and cost controls may not be successful or sufficient to offset the increases affecting our operations and could adversely affect our business, operating results and financial condition.

    Uncertainties regarding supply chain
        The global inflationary pressures, the legacy of the pandemic as well as geopolitical volatility may negatively impact availability and cost of critical material and equipment. This may be further exacerbated by the increase in the frequency and severity of natural disasters such as severe weather, floods and earthquakes which may further increase this risk. The risk of dependency on key suppliers requires ongoing focus and proactive management. A sustained unavailability and increased cost of critical material such as reagents and critical equipment may require DRDGOLD to find acceptable substitute suppliers and may also require it to pay higher prices for such materials, potentially affect production and increase operating costs resulting in loss of revenue. New projects may also be adversely affected by delays in supplies, freight costs and higher than inflationary increases for capital equipment which may affect operations and production, and ultimately result in failure to deliver into the business plans.

Our operations are subject to extensive environmental regulations which could impose significant costs and liabilities.

    Our operations are subject to increasingly extensive laws and regulations governing the protection of the environment under various state, provincial and local laws, which regulate air and water quality, hazardous waste management and environmental rehabilitation and reclamation. Our mining and related activities have the potential to impact the environment, including land, habitat, streams and environment near the mining sites. More complex and stringent regulations may lead us to face increased regulatory and stakeholder scrutiny, which may increase capital expenditures. Failure to comply with environmental laws or delays in obtaining, or failures to obtain government permits and approvals, or the imposition of additional permit/approval conditions may adversely impact our operations and may open us to enforcement actions and potential litigation. In addition, the regulatory environment in which we operate could change in ways that could substantially increase costs of compliance, resulting in a material adverse effect on our profitability.

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    We have incurred, and expect to incur in the future, expenditures to comply with these environmental laws and regulations. We have estimated our aggregate group Provision for Environmental Rehabilitation at a net present value of R562.1 million which is included in our statement of financial position as at June 30, 2023 (Refer to Item 18. ‘‘Financial Statements - Note 11 – Provision for environmental rehabilitation”). However, the ultimate amount of rehabilitation costs may in the future exceed the current estimates due to factors beyond our control, such as changing legislation, higher than expected cost increases, or unidentified rehabilitation costs. We used to fund these environmental rehabilitation costs by making contributions over the life of the mine to environmental trust funds or funds held in insurance instruments established for our operations. During fiscal year 2022 we changed the method of provision to funds held in insurance products. If any of our operations are prematurely closed, the rehabilitation funds may be insufficient to meet all the rehabilitation obligations of those operations. The closure of mining operations, without sufficient financial provision for the funding of rehabilitation liabilities, or unacceptable damage to the environment, including pollution or environmental degradation, may expose us and our directors to prosecution, litigation and potentially significant liabilities.

In addition to compliance with local laws and regulations, our operations are also increasingly subject to stakeholder expectations concerning the application of international environmental (and health and safety and social) standards. These include the Responsible Gold Mining Principles, IFC Performance Standards and World Bank guidelines. The application of these standards similarly increases the costs of compliance, while the failure to adhere to such standards can result in reputational damage and adversely affect our operations.

Regulators are increasingly focusing on enforcement of these applicable laws (including permitting requirements). Enforcement activities may cause our operations to cease or to be suspended and may require us to undertake corrective measures that require additional capital expenditure. We have also been, and may in the future be, subject to litigation and other costs as well as actions by authorities, affected stakeholders, non-governmental organisations and public bodies relating to environmental matters. These claims and actions can result in significant liabilities, penalties and fines which can adversely affect our business, operating results, and financial condition.

    Damage to tailings storage facilities and excessive maintenance and rehabilitation costs could result in lower production and health, safety and environmental liabilities.

Our tailings storage facilities are exposed to numerous risks and events, the occurrence of which may result in the failure, breach or damage of such a facility. These may include sabotage, piping or seepage failures, failure by our employees to adhere to the codes of practice and natural disasters such as excessive rainfall and seismic events, any of which could force us to stop or limit operations. This is further impacted and expected to intensify with the effects of climate change. In addition, the facilities could overflow or a side wall could collapse jeopardizing the health and safety of our employees and communities living around these facilities and potentially resulting in extensive property and environmental damage.

In the event of damage to, or any failure of, our tailings facilities, we could face legal proceedings (including criminal proceedings and public civil actions) and investigations for significant amounts of damages. Such actions would also likely entail significant costs and potentially involve the need for large expenditures to help regions and people affected to recover. The occurrence of any of these risks could adversely affect our operations and this in turn could have a material adverse effect on our business, operating results and financial condition.

The potential elimination of conventional wet tailings could also lead to large additional expenditures on research and development of new technologies. Changes in law and regulation, to impose more stringent standards, may also lead to increased capital expenditure to update our facilities, be able to expand our facilities in the future or continue to meet existing or more stringent legal (including permit) requirements.

Due to the nature of our business, our operations face extensive health and safety risks and regulation of those risks.

Gold mining is exposed to numerous risks and events, the occurrence of which may result in the death of, or personal injury, to employees or others. These risks and events include seismic events, heat, ground or slope failures, rock bursts, sink holes, fires, falls of ground and blockages, flooding, discharges of gases and toxic substances as well as radioactivity, unplanned detonation of explosives, blasting and the transport, storage and handling of hazardous materials.

According to section 54 of the Mine, Health and Safety Act of 1996, if an inspector believes that any occurrence, practice or condition at a mine endangers or may endanger the health or safety of any person at the mine, the inspector may give any instruction necessary to protect the health or safety of persons at the mine. These instructions could include the suspension of operations at the whole or part of the mine. Health and safety incidents could lead to mine operations being halted and that will increase our unit production costs, which could have a material adverse effect on our business, operating results and financial condition.

As with environmental incidents, so too may the occurrence of health and safety risks result in increased regulator and stakeholder scrutiny, which may lead to increases in compliance costs, and could result in enforcement actions and litigation (by regulators, affected stakeholders and others) that could lead to the imposition of significant fines or liabilities or otherwise adversely impact our operations through revocation of permits and approvals, the imposition of new conditions, and reputational impacts. The occurrence of such risks could have a material adverse effect on our business, operating results and financial condition.

    Events may occur for which we are not insured which could affect our cash flows and profitability.

    Because of the nature of our business, we may become subject to liability for pollution or other hazards against which we are unable to insure or are not insured, including those in respect of past mining activities. Our existing property, business interruption and other insurance contains certain exclusions and limitations on coverage. The insured value for property and loss of profits due to business interruption is R16.8 billion, with a total loss limit of R1.9 billion for Ergo and R650 million for FWGR for fiscal year 2024. Business interruption is only covered from the time the loss occurs and is subject to time and amount deductibles that vary between categories. To cover legal liability to third parties for damage, injury, illness or death a total of R1 billion insurance cover is in place for the 2024 fiscal year, subject to certain exclusions and limitations on coverage.
    
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    Insurance coverage may not cover the extent of claims brought against us, including claims for environmental, industrial or pollution related accidents or damages or interruption due to electricity supply failure / interruptions, for which coverage is not available. If we are required to meet the costs of claims, which exceed our insurance coverage, this could have a material adverse effect on our business, operating results and financial condition.

If we are unable to attract and retain key personnel our business may be harmed.

    The success of our business will depend, in large part, upon the skills and efforts of a small group of management and technical personnel including the positions of Chief Executive Officer and Chief Financial Officer. In addition, we compete with mining and other companies on a global basis to attract and retain key human resources at all levels with appropriate technical skills and operating and managerial experience necessary to operate the business. Factors critical to retaining our present staff and attracting additional highly qualified personnel include our ability to provide these individuals with competitive compensation arrangements, and other benefits. If we are not successful in retaining or attracting highly qualified individuals in key management positions, our business may be harmed. We do not maintain “key man” life insurance policies on any members of our executive team. The loss of any of our key personnel could delay the execution of our business plans, which may result in decreased production, increased costs and decreased profitability.

We are subject to operational risks associated with our flotation and fine-grind (FFG) project.

    Our flotation and fine-grind project, implemented in fiscal year 2014, is designed to improve extraction efficiencies.

    Certain components of the FFG were temporarily halted in the first quarter of fiscal year 2020 to perform an evaluation and compare the additional revenues earned from additional gold extracted from the most recently integrated reclamation sites compared to the cost incurred to operate the FFG circuit. The remaining components of the FFG continue to operate. Testing on the newly integrated material has suggested that some of these halted components will only operate in subsequent years once the related reclamation sites have been brought online in accordance with the current life of mine plan for ERGO. These halted components are classified as idle assets until they are brought back into operation as described. The success of the FFG is directly dependent on the material type and material mix processed through it. Therefore, the halted components will remain idle pending the continuation and conclusion of various test work regarding the material type and material mix of future reclamation sites. Firm decisions have also not yet been made by the executive committee and the Board of Directors on the future of the FFG. We remain subject to operations risks relating to the FFG project.

A disruption in our information technology systems, including incidents related to cyber security, could adversely affect our business operations.

We rely on the accuracy, availability and security of our information technology systems. Despite the measures that we have implemented, including those related to cyber security, our systems could be breached or damaged by computer viruses and systems attacks, natural or man-made incidents, disasters or unauthorized physical or electronic access.

    Any system failure, accident or security breach could result in business disruption, theft of our intellectual property, trade secrets (including our proprietary technology), unauthorized access to, or disclosure of, personnel or supplier information, corruption of our data or of our systems, reputational damage or litigation. We may also be required to incur significant cost to protect against or repair the damage caused by these disruptions or security breaches in the future, including, for example, rebuilding internal systems, implementing additional threat protection measures, defending against litigation, responding to regulatory inquiries or actions, paying damages, or taking other remedial steps with respect to third parties.

    These threats are constantly evolving, thereby increasing the difficulty of successfully defending against them or implementing adequate preventative measures and we remain subject to additional known or unknown threats. In some instances, we may be unaware of an incident or its magnitude and effects. We may be susceptible to new and emerging risks, including cyber-attacks and phishing, in the evolving landscape of cybersecurity threats. Given the increasing sophistication and evolving nature of these threats, DRDGOLD cannot rule out the possibility of them occurring in the future. An extended failure of critical system components, caused by accidental, or malicious actions, including those resulting from a cyber security attack, could result in a significant environmental incident, commercial loss or interruption to operations.

    In addition, from time to time, we implement updates to our information technology systems and software, which can disrupt or shutdown our information technology systems. Information technology system disruptions, if not appropriately addressed or mitigated, could have a material adverse effect on our operations.

Risks related to the gold mining industry

    A change in the dollar price of gold, which in the past has fluctuated widely, is beyond our control.

Historically, the gold price has fluctuated widely and is affected by numerous industry factors over which we have no control including:
• a significant amount of above-ground gold in the world that is used for trading by investors;
• the physical supply of gold from world-wide production and scrap sales, and the purchase, sale or divestment by central banks of their gold holdings;
• the demand for gold for investment purposes, industrial and commercial use, and in the manufacturing of jewelry;
• speculative trading activities in gold;
• the overall level of forward sales by other gold producers;
• the overall level and cost of production of other gold producers;
• international or regional political and economic events or trends;
• the strength of the dollar (the currency in which gold prices generally are quoted) and of other currencies;
• financial market expectations regarding the rate of inflation;
• interest rates;
• gold hedging and de-hedging by gold producers; and
• actual or expected gold sales by central banks and the International Monetary Fund.

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During fiscal year 2023 the gold price reached a high of U$2,072 per ounce and a low of U$1,612. We benefited from a sustained high gold price due to continued slow global economic recovery, economic uncertainty and geopolitical tensions.

    Investors globally, as they have in so many previous times of crisis, turned to gold and gold stocks as a safe haven asset, leading to a sustained high gold price for fiscal year 2023 after the highs experienced in fiscal year 2022. The rand/dollar exchange rate was volatile throughout the fiscal year 2023 mainly as a result of global, emerging market and South Africa economic uncertainty including uncertainties resulting from the global economic slowdown sentiment, rapidly rising global inflation, continued geopolitical tensions in Ukraine, perceived political and economic instability, structurally weak economic growth of the South African economy exacerbated by increasing loadshedding by power utility Eskom as it battles with supply.

    The factors mentioned above could put negative pressure on the price of gold or the rand/dollar exchange rate in the future. Our profitability may be negatively impacted by a decline in the gold price as we incur losses when revenue from gold sales drops below the cost of production for an extended period.

    The exploration of mineral properties is highly speculative in nature, involves substantial expenditures, and is frequently unproductive.
    
    Exploration is highly speculative in nature and requires substantial expenditure for drilling, sampling and analysis of ore bodies to quantify the extent of the gold reserve. Many gold exploration programs, including some of ours, do not result in the discovery of mineralization and any mineralization discovered may not be of sufficient quantity or quality to be mined profitably. If we discover a viable deposit, it usually takes several years from the initial phases of exploration until production is possible. During this time, the economic feasibility of production may change.

    Moreover, we rely on the evaluations of professional geologists, geophysicists, and engineers for estimates in determining whether to commence or continue mining. These estimates generally rely on scientific and economic assumptions, which in some instances may not be correct, and could result in the expenditure of substantial amounts of money on a deposit before it can be determined with any degree of accuracy whether the deposit contains economically recoverable mineralization. Uncertainties as to the metallurgical recovery of any gold discovered may not warrant mining based on available technology.

    Our future growth and profitability will depend, in part, on our ability to identify and acquire additional mineral rights, and on the costs and results of our continued exploration and development programs. Our business focuses mainly on the extraction of gold from tailings, which is a volume driven exercise. Only significant deposits within proximity of services and infrastructure that contain adequate gold content to justify the significant capital investment associated with plant, reclamation and deposition infrastructure are suitable for exploitation in terms of our model. There is a limited supply of these deposits which may inhibit exploration and developments, especially in a declining gold price environment.

    Because of these uncertainties, we may not successfully acquire additional mineral rights, or identify new Proven and Probable Ore Reserves in sufficient quantities to justify commercial operations in any of our operations. The costs incurred on exploration activities that do not identify commercially exploitable reserves of gold are not likely to be recovered and therefore are likely to be impaired.
    
There is inherent uncertainty in Mineral Reserves and Mineral Resources estimates.

    Our Mineral Reserve and Mineral Resources figures described in this document are the best estimates of our current management as of the dates stated and are reported in accordance with the requirements of the SEC’s Regulation S-K (Subpart 1300). These estimates may not reflect actual Mineral Reserves and Mineral Resources or future production.

    Should we encounter mineralization or formations different from those predicted by past drilling, sampling and similar examinations, reserve estimates may have to be adjusted and mining plans may have to be altered in a way that might ultimately cause our reserve estimates to decline. Moreover, if the rand price of gold declines, or stabilizes at a price that is lower than recent levels, or those assumed in our mining plans, or if our labor, specialized services providers, water, steel, electricity and other production costs increase or recovery rates decrease, it may become uneconomical to recover Mineral Reserves and Mineral Resources, particularly those containing relatively lower grades of mineralization. Under these circumstances, we would be required to re-evaluate our Mineral Reserves and Mineral Resources. Short-term operating factors relating to the ability to reclaim our Mineral Reserves, at the required rate, such as an interruption or reduction in the supply of electricity, limited deposition capacity or a shortage of water may have the effect that we are unable to achieve critical mass, which may render the recovery of Mineral Reserve, or parts of the Mineral Reserve no longer feasible, which could negatively affect production rate and costs and decrease our profitability during any given period. Estimates of Mineral Reserves and Mineral Resources are based on drilling results and because unforeseen conditions may occur in these mine dumps that may not have been identified by the drilling results, the actual results may vary from the initial estimates. These factors have in the past and could in the future result in reductions in our Mineral Reserves and Mineral Resources estimates and as a result, our production, which could in turn adversely impact the total value of our mining asset base and our business, operating results and financial condition.
    
    Gold mining is susceptible to numerous events that could have an adverse impact on a gold mining business.

    The business of gold mining is exposed to numerous risks and events, the occurrence of which may result in the death of or personal injury to employees, the loss of mining and reclamation equipment, damage to or destruction of mineral properties or production facilities, monetary losses, delays in production, environmental damage, loss of the license to mine and potential legal claims. The risks and events associated with the business of gold mining include:
environmental hazards and pollution, including dust generation, toxic chemicals, discharge of metals, pollutants, radioactive materials and other hazardous material into the air and water;
flooding, landslides, sinkhole formation, ground subsidence, ground and surface water pollution and waterway contamination;
a decrease in labor productivity due to labor disruptions, work stoppages, disease, slowdowns or labor strikes;
unexpected decline of ore grade;
metallurgical conditions or lower than expected gold recovery;
failure of unproven or evolving technologies;
mechanical failure or breakdowns and ageing infrastructure;
energy and electrical power supply interruptions;
availability of water;
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injuries to employees or fatalities due to falls from heights and accidents relating to mobile machinery or electrocution or other causes;
activities of illegal or artisanal miners;
material and equipment availability;
legal and regulatory restrictions and changes to such restrictions;
social or community disputes or interventions;
accidents caused from the collapse of tailings facilities;
pipeline failures and spillages;
safety-related stoppages; and
corruption, fraud and theft including gold bullion theft.

The occurrence of any of these hazards could delay production, result in losses, or increase production costs or decrease earnings and may result in significant legal claims and adversely impact our business results of operations and financial condition.

Risks related to doing business in South Africa

    Political or economic instability in South Africa may reduce our production and profitability.

    We are incorporated in South Africa and all our operations are currently in South Africa. Large parts of our operations are situated in urban areas where most of the communities that live near our facilities are in the grip of poverty and experience socio-economic stress. As a result, political and economic risks relating to South Africa which have been escalated over the last few years, could have a significant effect on our production and profitability. Large parts of the South African population are unemployed and do not have access to adequate education, health care, housing and other services, including water and electricity. Government policies aimed at alleviating and redressing the disadvantages suffered by most citizens under previous governments may increase our costs and reduce our profitability. Crime levels in recent years in South Africa have increased which expose the business to increase in frequency and severity of security issues that may disrupt business operations. These problems may impede fixed inward investment into South Africa and increase emigration of skilled workers and as a result, we may have difficulties retaining qualified employees.

    The sustained high unemployment rate of 32.6%, for 2023, amongst the youth, rising inequality and increased lawlessness has increased the risk of social unrest, such as protests and conflict, in our surrounding communities. Continuous lack of service delivery, political instability and slow reformative action being taken by all spheres of the South African government, specifically, in combating unemployment particularly in the youth of the country adds to a sense of frustration that may increase the potential of violent strikes that could cause damage to property, harm to people and disrupt operations. This frustration was a contributing factor that led to social unrest, people committing crimes, vandalising property, and damaging infrastructure during fiscal year 2023. A prolonged economic downturn could result in an extended period of high unemployment, further exacerbating anti-mining sentiments in South Africa. Poor service delivery by local government has caused communities to shift expectations to the private sector to provide essential services and for increased support and assistance. Poverty and high levels of unemployment have lead to demands to participate in, and benefit from, the economic activities of our business. Failure to recognise these could result in miscommunication, misaligned expectations and loss of trust that in turn could threaten our social licence to operate.

Furthermore, the rise of ESG factors, such as electricity usage, social unrest, social license to operate, climate change, water usage and environmental stewardship, in investment decisions may result in divestment in the mining sector.

    Inflation can adversely affect us.

    The inflation rate in South Africa is relatively high compared to developed, industrialized countries, although many countries around the world are currently facing inflation challenges. As of June 30, 2023, the annual Consumer Price Inflation Index (“CPI”), stood at 5.4% compared to 7.4% in June 2022 and 4.9% in June 2021. Annual CPI was 5.4% as at September 30, 2023. Inflation in South Africa generally results in an increase in our rand operational costs. Higher and sustained inflation in the future, with a consequent increase in operational costs could have a material adverse effect on our results of operations and our financial condition and could result in operations being discontinued or reduced or rationalized, which could reduce our profitability.

The treatment of occupational health diseases and the potential liabilities related to occupational health diseases may have an adverse effect on the results of our operations and our financial condition.

We may be subject to claims relating to occupational health diseases and we are currently subject to legal action described below.

In January 2013, DRDGOLD, East Rand Proprietary Mines Limited (“DRDGOLD Respondents”) and 23 other mining companies (“Other Respondents”) (collectively referred to as “Respondents”) were served with a court application issued in the High Court of South Africa for a class certification on behalf of former mineworkers and dependents of deceased mineworkers (“Applicants”). In the application the Applicants allege that the Respondents conducted underground mining operations in a negligent and complicit manner causing the former mineworkers to contract occupational lung diseases. The Applicants have as yet not quantified the amounts which they are demanding from the Respondents in damages.

On May 3, 2018, the Applicants and Anglo American South Africa Limited, AngloGold Ashanti Limited, Sibanye Gold Proprietary Limited trading as Sibanye-Stillwater, Harmony Gold Mining Company Limited, Gold Fields Limited, African Rainbow Minerals Limited and certain of their affiliates (“Settling Companies”) settled the class certification application in which the Applicants in each sought to certify class actions against gold mining houses cited therein on behalf of mineworkers who had worked for any of the particular respondents and who suffer from any occupational lung disease, including silicosis or tuberculosis.

The DRDGOLD Respondents, are not a party to the settlement between the Applicants and Settling Companies. The dispute, insofar as the class certification application and appeal thereof is concerned, still stands and has not terminated in light of the settlement agreement (refer to Item 18. “Financial Statements - Note 26 – Contingencies”).

An adverse judgment in the claim described above or any other claim could have an adverse impact on our financial condition and operating results and could result in increased regulatory and stakeholder scrutiny which could lead to increased compliance costs.
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    We have experienced an increase in organised crime activities which have started to target gold plants.

    In October 2019, a number of companies, including our Knights and Ergo plants, were subject to armed attacks targeting the gold in the plants or high-grade gold bearing material. These incidents were very well organised and in all the incidents the thieves were armed. In some of the incidents employees of companies were also held hostage until the targeted material was obtained. In the 2019 incident, a security officer was fatally injured.

    Any such incidents have and may still result in losses of gold or other damage which could have a material adverse impact on our business, financial results or condition.

    Theft at our sites, particularly of copper and pipelines, may result in greater risks to employees or interruptions in production.

    Crime statistics in South Africa indicate an increase in theft. This together with price increases for copper and steel has resulted in theft of copper cables and pipelines. Our operations experience high incidents of copper cable theft and pipelines despite the implementation of enhanced security measures which have increased our security spend. At times, the incidences have resulted in serious injuries of our security personnel. In addition to the general risk to employees’ lives in an area where theft occurs, we may suffer production losses and incur additional costs as a result of power interruptions caused by cable theft and theft of bolts used for the pipeline.

    Power stoppages or shortages or increases in the cost of power could negatively affect our results and financial condition.

    Our mining operations are dependent on electrical power supplied by Eskom, South Africa’s state-owned utility company. Electricity makes up approximately 15% of our operating costs. Eskom has become incapable of satisfying the energy requirements of the South African economy and is applying a system of power rationing or load shedding to prevent a complete collapse of the national electricity grid. It is a distressed enterprise unlikely to make a full recovery. It is owed billions of rands by local municipalities and in more recent times has also fallen victim to damage to its supply grid through incessant cable theft. This poses a threat to our ability to maintain the requisite volume throughput to deliver into our business plan, while the steps we are required to take to curtail load during load shedding, like intermittently switching off our mills, also impact recovery efficiencies. The private sector has responded by accelerating private production of renewable power, with an estimated 2GW of installed 'roof-top' capacity in place. Government's own measures are lagging though, and it has been slow to administer the freeing up of power generation on a larger scale. Load shedding will therefore be with us for the foreseeable future.

National Energy Regulator of South Africa (“NERSA”) approved Eskom annual tariff increases of 18.65% effective 1 April 2024, significantly above the South African CPI. These increases have had an adverse effect on our production costs and similar or higher future increases could have a material adverse effect on our operating results and financial condition.

The security of future power supply as well as the cost thereof remains a risk and may have major implications for our operations, which may result in significant production losses.

    In 2019, the President of South Africa announced the vertical unbundling of Eskom to improve efficiencies and have an independent grid operator and open competition for energy generation at lower cost to the consumer. While full state ownership will be maintained, the unbundling is expected to result in the separation of Eskom’s generation, transmission and distribution functions into separate entities, which may require legislative and/or policy reform. The unbundling is still ongoing; however, it is expected to be completed by March 2024 in respect of the generation and distribution functions. Poor reliability of the supply of electricity and instability in prices through the unbundling process is expected to continue. Eskom’s coal fired power plants have not performed well for a number of years, with national rotational power cuts (load shedding) having been implemented intermittently through the last number of fiscal years. Should we experience further power tariff increases, our business operating results and financial condition may be adversely impacted.

    Ergo is currently developing a Solar Power Project to reduce its reliance on Eskom and to reduce its future cost of electricity but we face risks in the development of this project as such the project may not be completed within expected timeframe or budget and may not reduce our
dependence on Eskom as expected.

Ergo is currently disputing the electricity tariff charged by Ekurhuleni Metropolitan Municipality. Over the past several years, the municipality has charged Ergo for the electricity it draws from the Ergo Central Substation. However, Ergo determined that only Eskom may legitimately charge for the drawn and consumed electricity. Ergo has instituted legal proceedings by way of an application and since then, the municipality has issued two summonses. Ergo has made payments under protest and without prejudice or admission of liability. The outcome of Ergo's application remains uncertain and may result in adverse impacts on the business, operating results and financial condition.


Risks related to climate change

Extreme weather

As a result of climate change, our operations are exposed to severe weather events that have in the past and could in the future interrupt production and our supply chain. Major property, infrastructure and/or environmental damage as well as loss of human life could be caused by extreme weather events such as droughts, extreme rainfall and high wind volumes which are all on the increase in terms of frequency, duration and intensity. Specifically, we have experienced an increase in intensity of events, such as thunderstorms on the Highveld, where our operations are situated. It is believed that the long-term upward trend in global temperature is directly correlated with the increase in global severe weather events both in terms of magnitude and frequency.     

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    For example, dry weather conditions have prompted level 1 water restrictions on residential water users in the Johannesburg area. These water restrictions remain in place as at September 30, 2023. In the cases where municipal water is used, these restrictions can result in reclamation sites not being able to transfer material to the processing plants and also the processing plants not being able to operate at full capacity. Severe thunderstorms and high winds, especially during the summer rainy season, may also cause damage to operation infrastructure that may in turn cause an interruption in the production of gold. Such incidents and other weather events may damage the facility and may result in water shortages which can impact our operations and cause the interruption of deposition and gold production until the facility is repaired or alternative deposition is brought online.

The occurrence of these risks and events may result in adverse impacts to our workforce, production interruptions, increased operational costs associated with mitigations measures and power and supply chain disruptions, project delays and increased production pricing. All of this may result in adverse impacts on our business, operating results and financial condition.

Scarcity of water may negatively affect our operations.

South Africa is a relatively dry area and predictions are that dry conditions will escalate. South Africa faces water shortages, which may lead to the revision of water usage strategies by several sectors in the South African economy, including electricity generation and municipalities. This may result in rationing or increased water costs. Such changes would adversely impact our surface retreatment operations, which use water to transport the slimes or sand from reclaimed areas to the processing plant and to the tailings facilities. In addition, as our gold plants and piping infrastructure were designed to carry certain minimum throughputs, any reductions in the volumes of available water may require us to adjust production at these operations.

DRDGOLD invested R22 million in the construction of a filtration plant at the Rondebult Waste Water Works (operated by the East Rand Water Care Company) to treat sewage water to reduce the use of potable water. This water is used both to reclaim and carry production materials and also, ultimately, to irrigate rehabilitation vegetation at a significantly lower cost than that of potable water. The plant was commissioned in early fiscal year 2016 and has design capacity to provide Ergo with 10 Mega Litres (“Ml”) a day from the Rondebult sewage treatment facility. However, due to the deterioration of the local government authorities’ infrastructure, the expected quantity of sewerage is not reaching the treatment facility and as a result Ergo is still not able to extract the full design capacity of 10 Ml of water a day. It is not certain if and when the flow of sewerage will reach expected levels.

These measures may not be sufficient to alleviate the water scarcity issues we face.

Failure to adapt or transition to climate change measures

The company is also exposed to a growing number of critical drivers of change and expectations. This include new national and international regulations, increased public concerns as well as pressure from lobby groups, regulators and investors for Companies to address and report on the impact of climate change risks in a meaningful manner.

The need to adapt or transition in response to climate change, including complying with new regulations and responding to increased stakeholder expectations, could result in increased compliance and operating costs as well as having other business impacts on production costs and capacity. Failure to adopt measures in the face of transition risks may also negatively impact the business and could lead to reduced investor confidence.

Risks related to government regulation

    Government policies in South Africa may adversely impact our operations and profits.
    
    The mining industry in South Africa is extensively regulated through legislation and regulations issued through the government’s administrative bodies. These involve directives in respect of health and safety, water usage, the mining and exploration of minerals and managing the impact of mining operations on the environment. A variety of permits and authorities are required to mine lawfully, and the government enforces its regulations through the various government departments. Lack of communication between government and regulators as well as ineffective regulators remains an issue that may increase the cost of compliance and obtaining permits. The formulation or implementation of government policies may be discretionary and unpredictable on certain issues, including changes in conditions for the issuance of licenses insofar as social and labor plans are concerned, transformation of the workplace, laws relating to mineral rights, ownership of mining assets and the rights to prospect and mine, additional taxes on the mining industry and in extreme cases, nationalization. A change in regulatory or government policies could adversely affect our business and may also result in increased project costs and potential delays.
        
    Mining royalties and other tax reform could have an adverse effect on the business, operating results and financial condition of our operations.

    The Mineral and Petroleum Resources Royalty Act, No.28 of 2008 and the Mineral and Petroleum Resources Royalty Act (Administration), No.29 of 2008 govern royalty rates for gold mining in South Africa. These acts provide for the payment of a royalty, calculated through a royalty rate formula (using rates of between 0.5% and 5.0%) applied against gross revenue per year, payable half yearly with a third and final payment thereafter. The royalty is tax deductible and the cost after tax amounts to a rate of between 0.33% and 3.3% at the prevailing marginal tax rates applicable to the taxed entity. The royalty is payable on old unconverted mining rights and new converted mining rights. Based on a legal opinion the Company obtained, mine dumps created before the enactment of the Mineral and Petroleum Resources Development Act (“MPRDA”) fall outside the ambit of this royalty and consequently the Company does not pay any royalty on any dumps created prior to the MPRDA. Introduction of further revenue based royalties or any adverse future tax reforms could have an adverse effect on our business, operating results and financial condition.

    Failure to comply with the requirements of the Broad Based Socio-Economic Empowerment Charter 2018 could have an adverse effect on our business, operating results and financial condition of our operations.

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    On September 27, 2018, the Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018 (“Mining Charter 2018”) was published in Government Gazette No. 41934 of Government Notice No. 639 on September 27, 2018. Mining Charter 2018 requires, inter alia, an enduring 30% Black Economic Empowerment ("BEE") interest in respect of new mining rights. It also has extensive provisions in respect of Historically Disadvantaged Persons (“HDP”) representation at board and management, as well as provisions relating to local procurement of goods and services. The procurement target of the total spend on services from South African companies has been pegged at 80% (up from 70% in Mining Charter III) and 60% of the aggregate spend thereof must be apportioned to BEE entrepreneurs.

     In March 2019, the Mineral Council of South Africa brought an application in the High Court, Pretoria for a judicial review and setting aside of certain provisions in Mining Charter 2018.

    On September 21, 2021, the High Court of South Africa ruled that the Mining Charter 2018 is not binding subordinate legislation but an instrument of policy. This ruling affirmed that the Minister of Mineral Resources and Energy (“MRE Minister”) was not entitled to make law through the Mining Charter 2018 to require 30% HDP ownership for the renewal of existing mining rights. The MRE Minister confirmed that they will not appeal the ruling.

    DRDGOLD cannot guarantee that it will meet all the targets set out by the Mining Charter 2018. For example, if the Mining Charter 2018 were to remain in its current form, there is no assurance that the goods, services and supplies in South Africa would be sufficient to allow us to meet the targets.  More specifically, DRDGOLD may not be able to meet the requirement that 80% of total mining goods and services procurement spend be on South African-manufactured goods due to an insufficient number of suppliers in South Africa with heavy equipment. DRDGOLD may be required to increase participation by HDP in senior positions and allocate additional resources for the development of the mine community, human resources, sustainability, procurement and enterprise. DRDGOLD may also be required to make further adjustment to the ownership structure of its South African mining assets, including increasing the ownership of HDP, in order to meet the Mining Charter 2018 requirements. Any such additional measures could have a material adverse effect on our business, operating results and/or financial condition.

    In addition, if we are unable to obtain sufficient representation of HDP at the board level and in management positions or if there are not sufficient succession plans in place, this could have a material adverse effect on our business (including resulting in the imposition of fines and having a negative effect on production levels), operating results and financial position. In relation to this, the mining industry, including DRDGOLD, continues to experience a global shortage of qualified senior management and technically skilled employees. DRDGOLD may be unable to hire or retain appropriate senior management, technically skilled employees or other management personnel, or may have to pay higher levels of remuneration than it currently intends in order to do so.

    Also, there is no guarantee that any steps DRDGOLD has already taken or might take in the future will ensure the retention of its existing mining rights, the successful renewal of its existing mining rights, the granting of applications for new mining rights or that the terms of renewals of its mining rights would not be significantly less favourable than the terms of its current mining rights. Any further adjustment to the ownership structure of DRDGOLD’s South African mining assets in order to meet the above mentioned requirements could have a material adverse effect on the value of DRDGOLD’s securities

    Refer to Item 4B. Business Overview – Governmental regulations and their effect on our business – The Broad Based Socio-Economic Empowerment Charter.

Government policies in South Africa may adversely impact our operations and profits related to financial provisioning for rehabilitation.

    An amendment to the MPRDA was first proposed in 2013. The amendment bill, if implemented, would have had a material adverse impact on the Group's estimated financial provisions for environmental remediation and management due to the proposed inclusion of historic and old mine dumps in the definition of “residue stockpiles” as well as the extension of the liability for rehabilitation beyond the issuance of a closure certificate and the requirement to maintain financial provision for closed sites within a period of 20 years after a site is closed. The MPRDA Amendment Bill was withdrawn in August 2018 by the MRE Minister, citing, amongst other things, the adequacy of the current MPRDA to deal with all regulatory matters pertaining to the mining and petroleum industries.

    Revised Financial Provisioning Regulations (“FPR”) were published on November 20, 2015, under the National Environmental Management Act, 107 of 1998 (“NEMA”) and became effective from the date of publication thereof. Proposed amendments to the FPRs were published for public comment GNR 1228 GG 41236 of November 10, 2017 (“Draft Regulations”), which seek to address some challenges relating to the implementation thereof. Under these FRPs to be implemented by the DMRE, existing environmental rehabilitation trust funds may only be used for post closure activities and may no longer be utilised for their intended purpose of concurrent and final rehabilitation and closure.

    Several further proposed amendments to the FPRs, (“Proposed Amendments”) were published subsequently. The latest Proposed Amendments were published in July 2022 which, inter alia, extends the compliance with these regulations to three months following the fiscal year end June 30, 2023.

    The Proposed Amendments, in their current form and which are still subject to the approval of the DMRE and Treasury, allow under certain circumstances for the withdrawal against financial provision (which is currently not contemplated in the FPR). It is therefore uncertain whether these provisions relating to withdrawal will remain in their current form, or at all.

     See discussion in 4.B. Business Overview – Governmental regulations and their effect on our business – Financial Provision for Rehabilitation.

The implementation of Carbon Tax effective from June 1, 2019 may have a direct or indirect material adverse effect on our business, operating results and financial condition.

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    The Carbon Tax Act No 15 of 2019, or the CTA, came into effect from June 1, 2019. The CTA is based on the polluter-pays-principle and will be implemented across phases. The first phase ran from June 1, 2019 to December 31, 2022 and is applicable to scope 1 emitters. The first phase did not have a material financial impact on the Group. The second phase starting date was pushed from January 1, 2023 to January 2026. During the first phase, tax-free emission allowances ranging from 60 per cent to 95 per cent are available to emitters in this first phase. This includes a basic tax-free allowance of 60 per cent for all activities, a 10 per cent process and fugitive emissions allowance, a maximum 10 per cent allowance for companies that use carbon offsets to reduce their tax liability, a performance allowance of up to 5 per cent for companies that reduce the emissions intensity of their activities, a 5 per cent carbon budget allowance for complying with the reporting requirements and a maximum 10 per cent allowance for trade exposed sectors. The South African government indicated that a review of the impact of the carbon tax will be conducted before the second phase of the South African Carbon Tax Act is implemented.

Initially, the draft explanatory memorandum of the Taxation Laws Amendment Bill proposed that amendment to section 5(2) of the Carbon Tax Act to provide for the carbon tax rate adjustment by US$1, US$2 and US$3/ t CO2e for the 2023, 2024 and 2025 tax periods ending on 31 December using the average exchange rate as defined in the Income Tax Act. The rate will thereafter increase gradually to US$20t CO2e in 2026 and at least to US$30/t CO2e in 2030. However, after public consultation, it was decided that the increases would be rand-based due to the instability of the USD/rand exchange rate. Currently under phase 1 an amount of R159/t CO2e carbon tax is charged on scope 1 emissions. It remains unclear whether the scope will include scope 2 emissions which typically include indirect emissions from electricity consumption. Although the decarbonization of electricity as an energy supply must nevertheless be prioritized by both the country and industries at large to de-carbonize the economy, the increased proposed rates is expected to have an adverse impact on business.

The carbon tax has not had an impact on the price of electricity. However, should Eskom be required to pass on the cost of the tax from its emissions to its customers, electricity tariffs may rise significantly. This may also affect the electricity prices charged to our suppliers who may pass on the tax to us increasing the price of goods and services we consume in our operation.

    Regulations detailing the tax-free emission allowances during the second phase have not been published to date. The second phase of implementation of the Carbon Tax may have a material direct and/or indirect adverse effect on our business, operating results and financial condition if the tax-free emission allowances are significantly reduced or the scope of implementation of the CTA is significantly increased. In addition, the potential increases in costs resulting from suppliers passing through their Carbon Tax exposure to the Company may have a direct or indirect material adverse effect on our business, operating results and financial condition.

    Ring-fencing of unredeemed capital expenditure for South African mining tax purposes could have an adverse effect on the business, operating results and financial condition of our operations.

    The Income Tax Act No 58 of 1962, or the ITA, contains certain ring-fencing provisions in section 36 specifically relating to different mines regarding the deduction of certain capital expenditure and the carry over to subsequent years. After the restructuring of the surface operations, effective July 1, 2012, Ergo is treated as one taxpaying operation pursuant to the relevant ring-fencing legislation. It is expected that FWGR will also be treated as one taxpaying operation pursuant to the relevant ring-fencing legislation. In the event that we are unsuccessful in confirming our position or should the South African Revenue Service have a different interpretation of section 36 of the ITA, it could have an adverse effect on our business, operating results and financial condition.

    Draft amendments to the ITA regarding claiming accelerated capital expenditure allowances for South African mining tax purposes could have an adverse effect on the business, operating results and financial condition of our operations.

    The National Treasury has proposed a prospective amendment to the preamble of section 15 of the ITA to limit the accelerated capital expenditure allowances applicable to taxpayers conducting mining operations to only those taxpayers that hold “a mining right as defined in section 1 of the Mineral and Petroleum Resources Development Act in respect of the mine where those mining operations are carried on”. In addition, in relation to section 36 of the ITA, the National Treasury has proposed an amendment to the heading in order to limit the application of the provisions in respect of the calculation of the redemption allowance and balance of unredeemed capital expenditure, to certain mining operations. It remains uncertain whether these proposed amendments will be promulgated.

    DRDGOLD, as a surface miner, conducts mining operations for its own benefit (i.e. it is not a contract miner) but DRDGOLD is not required to hold a mining right in terms of the MPRDA. The proposed requirement by the ITA to require a miner to hold a mining right in terms of the MPRDA will preclude DRDGOLD from claiming accelerated capital expenditure allowances in terms of sections 15 and 36 of the ITA.

    If these proposed amendments are adopted, it will accelerate cash outflows resulting from current tax expenditure. This could have a material adverse effect on our cash flows, operations, capital investment decisions and financial condition.
    
    Assessment of unredeemed capital expenditure by the South African Revenue Service could have an adverse effect on the business, operating results and financial condition of our operations.

    The South African Revenue Service (“SARS”) assesses capital expenditure when it is redeemed against taxable mining income rather than when it is incurred. A different interpretation by SARS could have an adverse effect on our business, operating results and financial condition.
    
    Since our South African labor force has substantial trade union participation, we face the risk of disruption from labor disputes and new South African labor laws.

    Labor costs are significant for Ergo, constituting 18% of Ergo’s production costs for fiscal year 2023 (2022: 18%). As of June 30, 2023, our Ergo operations provided full-time employment for 744 employees while our main service providers deployed an additional 1856 employees to our operations, of whom approximately 88% are members of trade unions or employee associations.

    Labor costs are significant for FWGR, constituting 20% of FWGR’s production costs for fiscal year 2023 (2022: 21%). As of June 30, 2023, our FWGR operations provided full-time employment for 153 employees while our main service providers deployed an additional 299 employees to our operations, of whom approximately 95% are members of trade unions or employee associations. We have entered into various agreements regulating wages and working conditions at our mines. Unreasonable wage demands could increase production costs to levels where our operations are no longer profitable. This could lead to accelerated mine closures and labor disruptions. We are also susceptible to strikes by workers from time to time, which result in disruptions to our mining operations.
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    In recent years, labor laws in South Africa have changed in ways that significantly affect our operations. In particular, laws that provide for mandatory compensation in the event of termination of employment for operational reasons and that impose large monetary penalties for non-compliance with the administrative and reporting requirements of affirmative action policies could result in significant costs to us. In addition, future South African legislation and regulations relating to labor may further increase our costs or alter our relationship with our employees. Labor cost increases could have an adverse effect on our business, operating results and financial condition.
    
    Labor unrest could affect production.

    During March 2022 to June 2022 there was strike action by staff at the Sibanye-Stillwater gold mines adjacent to FWGR. FWGR’s gold bars are smelted at Sibanye-Stillwater’s Driefontein plant. This resulted in Ergo having to smelt FWGR gold on their behalf. Such events at our operations or at our reclamation sites has in the past and could in future have an adverse effect on our business, operating results and financial condition.

    We use a third party service provider for the management of our reclamation sites as well as on our Brakpan/Withok TSF and Driefontein 4 TSF. Any labor unrest or other significant issue at this third party service provider may impact the operation of this facility.
    
    Strike action and intimidation at mining operations adjacent to our FWGR mining operations could have an adverse effect on our business, operating results and financial condition.

    Our financial flexibility could be materially constrained by South African currency restrictions.

South African law provides for exchange control regulations, which restrict the export of capital from South Africa, the Republic of Namibia, and the Kingdoms of Lesotho and Eswatini, known collectively as the Common Monetary Area (the “CMA”). The Exchange Control Department of the South African Reserve Bank, or SARB, is responsible for the administration of exchange control regulations. In particular, South African companies:
are generally not permitted to export capital from South Africa or to hold foreign currency without the approval of the SARB;
are generally required to repatriate, to South Africa, profits of foreign operations; and
are limited in their ability to utilize profits of one foreign business to finance operations of a different foreign business.

    While the South African Government has relaxed exchange controls in recent years, South African companies remain subject to restrictions on their ability to deploy capital outside of the CMA and it is difficult to predict whether such relaxation of controls will continue in the future. As a result, DRDGOLD’s ability to raise and deploy capital outside the CMA is restricted. These restrictions could hinder DRDGOLD’s financial and strategic flexibility, particularly its ability to fund acquisitions, capital expenditures and exploration projects outside South Africa. For further information see Item 10D. Exchange Controls.

    We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws outside of the United States.

    The U.S. Foreign Corrupt Practices Act, or the FCPA, and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials or other persons for the purpose of obtaining or retaining business. This includes aggressive investigations and enforcement proceedings by both the U.S. Department of Justice and the SEC, increased enforcement activity by non- U.S. regulators, and increases in criminal and civil proceedings brought against companies and individuals. Our policies mandate compliance with the FCPA and other applicable anti-bribery laws. Our internal control policies and procedures may not protect us from reckless or criminal acts committed by our employees, the employees of any of our businesses, or third party intermediaries. In the event that we believe or have reason to believe that our employees or agents have or may have violated applicable anti-corruption laws, including the FCPA, we would investigate or have outside counsel investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management. Violations of these laws may result in criminal or civil sanctions, inability to do business with existing or future business partners (either as a result of express prohibitions or to avoid the appearance of impropriety), injunctions against future conduct, profit disgorgements, disqualifications from directly or indirectly engaging in certain types of businesses, the loss of business permits, reputational harm or other restrictions which could disrupt our business and have a material adverse effect on our business, financial condition, results of operations or liquidity.

    We face risks with respect to compliance with the FCPA and similar anti-bribery laws through our acquisition of new companies and the due diligence we perform in connection with an acquisition may not be sufficient to enable us fully to assess an acquired company’s historic compliance with applicable regulations. Furthermore, as we make acquisitions such as the acquisition of FWGR, our post-acquisition integration efforts may not be adequate to ensure our system of internal controls and procedures are fully adopted and adhered to by acquired entities, resulting in increased risks of non-compliance with applicable anti-bribery laws.

Risks related to ownership of our ordinary shares or ADSs

    It may not be possible for you to effect service of legal process, enforce judgments of courts outside of South Africa or bring actions based on securities laws of jurisdictions other than South Africa against us or against members of our board.

Our Company, certain members of our board of directors and executive officers are residents of South Africa. All our assets are located outside the United States and a major portion with respect to the assets of members of our board of directors and executive officers are either wholly or substantially located outside the United States. As a result, it may not be possible for you to effect service of legal process, within the United States or elsewhere including in South Africa, upon most of our directors or officers, including matters arising under United States federal securities laws or applicable United States state securities laws.

Moreover, it may not be possible for you to enforce against us or the members of our board of directors and executive officers’ judgments obtained in courts outside South Africa, including the United States, based on the civil liability provisions of the securities laws of those countries, including those of the United States. A foreign judgment is not directly enforceable in South Africa, but constitutes a cause of action which will be enforced by South African courts provided that:

the court which pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by South African law with reference to the jurisdiction of foreign courts;
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the judgment is final and conclusive (that is, it cannot be altered by the court which pronounced it);
the judgment has not lapsed;
the recognition and enforcement of the judgment by South African courts would not be contrary to public policy, including observance of the rules of natural justice which require that no award is enforceable unless the defendant was duly served with documents initiating proceedings, that he was given a fair opportunity to be heard and that he enjoyed the right to be legally represented in a free and fair trial before an impartial tribunal;
the judgment was not obtained by fraudulent means;
the judgment does not involve the enforcement of a penal or revenue law; and
the enforcement of the judgment is not otherwise precluded by the provisions of the Protection of Business Act, 1978 (as amended), of South Africa.

    It is the policy of South African courts to award compensation for the loss or damage sustained by the person to whom the compensation is awarded. Although the award of punitive damages is generally unknown to the South African legal system that does not mean that such awards are necessarily contrary to public policy. Whether a judgment was contrary to public policy depends on the facts of each case. Exorbitant, unconscionable, or excessive awards will generally be contrary to public policy. South African courts cannot enter into the merits of a foreign judgment and cannot act as a court of appeal or review over the foreign court. South African courts will usually implement their own procedural laws and, where an action based on an international contract is brought before a South African court, the capacity of the parties to the contract will usually be determined in accordance with South African law.

    It is doubtful whether an original action based on United States federal securities laws may be brought before South African courts. A plaintiff who is not resident in South Africa may be required to provide security for costs in the event of proceedings being initiated in South Africa. Furthermore, the Rules of the High Court of South Africa require that documents executed outside South Africa must be authenticated for use in South African courts. It may not be possible therefore for an investor to seek to impose liability on us in a South African court arising from a violation of United States federal securities laws.

Dividend withholding tax will reduce the amount of dividends received by beneficial owners.

On April 1, 2012, the South African Government replaced Secondary Tax on Companies (then 10%) with a 15% withholding tax on dividends and other distributions payable to shareholders. The dividend withholding tax rate was increased to 20%, effective from February 22, 2017. The withholding tax reduces the amount of dividends or other distributions received by our shareholders. Any further increases in such tax will further reduce net dividends received by our shareholders.

Your rights as a shareholder are governed by South African law, which differs in material respects from the rights of shareholders under the laws of other jurisdictions.

Our Company is a public limited liability company incorporated under the laws of the Republic of South Africa. The rights of holders of our ordinary shares, and therefore many of the rights of our ADS holders, are governed by our memorandum of incorporation and by South African law. These rights differ in material respects from the rights of shareholders in companies incorporated elsewhere, such as in the United States. In particular, South African law significantly limits the circumstances under which shareholders of South African companies may institute litigation on behalf of a company.

Control by principal shareholders could adversely affect our other shareholders.

Sibanye-Stillwater beneficially owns 50.1% of our outstanding ordinary shares and voting power and has the ability to control, our board of directors. Sibanye-Stillwater will continue to have control over our affairs for the foreseeable future, including with respect to the election of directors, the consummation of significant corporate transactions, such as an amendment of our constitution, a merger or other sale of our company or our assets, and all matters requiring shareholder approval. In certain circumstances, Sibanye-Stillwater’s interests as a principal shareholder may conflict with the interests of our other shareholders and Sibanye-Stillwater’s ability to exercise control, or exert significant influence, over us may have the effect of causing, delaying, or preventing changes or transactions that our other shareholders may or may not deem to be in their best interests. In addition, any sale or expectation of sale of some or all the shares held by Sibanye-Stillwater could have an adverse impact on our share price.
Sales of large volumes of our ordinary shares or ADSs or the perception that these sales may occur, could adversely affect the prevailing market price of such securities.

The market price of our ordinary shares or ADSs could fall if substantial amounts of ordinary shares or ADSs are sold by our stockholders, or there is the perception in the marketplace that such sales could occur. Current holders of our ordinary shares or ADSs may decide to sell them at any time. Sales of our ordinary shares or ADSs, if substantial, or the perception that any such substantial sales may occur, could exert downward pressure on the prevailing market prices for our ordinary shares or ADSs, causing their market prices to decline. Trading activity of hedge funds and the ability to borrow script in the marketplace will increase trading volumes and may place our share price under pressure.


ITEM 4. INFORMATION ON THE COMPANY

4A. HISTORY AND DEVELOPMENT OF THE COMPANY

Introduction

    DRDGOLD, is a South African domiciled company that holds assets engaged in surface gold tailings retreatment in South Africa including exploration, extraction, processing and smelting.
    
    We are a public limited liability company, incorporated in South Africa on February 16, 1895, as Durban Roodepoort Deep, Limited. On December 3, 2004, the company changed its name from Durban Roodepoort Deep Limited to DRDGOLD Limited. Our operations focus on South Africa's Witwatersrand Basin, which has been a gold producing region for over 120 years.

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    Our shares and/or related instruments trade on the Johannesburg Stock Exchange (“JSE”), the New York Stock Exchange and the A2X.

    Our registered office and business address is Constantia Office Park, Cnr 14th Avenue and Hendrik Potgieter Road, Cycad House, Building 17, Ground Floor, Weltevreden Park, 1709, South Africa. The postal address is P.O. Box 390, Maraisburg, 1700, South Africa. Our telephone number is (+27 11) 470-2600 and our facsimile number is (+27 86) 524-3061. We are registered under the South African Companies Act 71, 2008 under registration number 1895/000926/06. For our ADSs, the Bank of New York Mellon, at 101 Barclay Street, New York, NY 10286, United States, has been appointed as agent.

The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov. Our internet address is http://www.drdgold.com. The information contained on our website is not incorporated by reference and does not form part of this annual report.

    All of our operations are conducted in South Africa.

    Our operations primarily consist of Ergo and FWGR. Our Ergo operations include the historic Crown operations (which were restructured into Ergo during fiscal year 2012 and have substantially been rehabilitated as at the end of fiscal year 2018). East Rand Proprietary Mines Limited's (“ERPM”) underground mining infrastructure was under care and maintenance up to this reporting date. The decommissioning and rehabilitation of the last remaining underground mining infrastructure was completed in fiscal year 2021.

ERGO

    Ergo was formed in June 2007. Ergo is the surface tailings retreatment operation which consists of what was historically the Crown Gold Recoveries Proprietary Limited (“Crown”), ERPM Cason Dump operation and the Ergo Gold business units. On July 1, 2012, Ergo acquired the mining assets and certain liabilities of Crown and all the surface assets and liabilities of ERPM as part of the restructuring of our surface operations.

    Capital expenditure for the Ergo projects is mainly financed through operational cash flows while financing for significant growth projects may be obtained through specific financing arrangements, if required.

Brakpan/Withok TSF final life design
    
    The Brakpan/Withok final life design is the engineering design that ultimately brings the tailings storage facility to its finality in terms of extent, operation, rehabilitation and management. The implemented final design would result in alignments with the Global Industry Standard on Tailings Management (“GISTM”) and regulatory bodies, increase deposition capacity, improve operation/management and bring about the sustainable closure of the facility.

Updated designs for the final stage of the Brakpan/Withok TSF are being reviewed, in anticipation of submission to the DWAS Dam Safety Office by the end of fiscal year 2024. The final life design will include the build of a synthetic barrier system in place for ground water protection. The Ergo life of mine is 19 years.

For further information on other capital investments, divestures, capital expenditure and capital commitments, see Item 4D. Property, Plant and Equipment, and Item 5B. Liquidity and Capital Resources.

FWGR

    On July 31, 2018, we acquired certain gold surface processing assets and tailing storage facilities that included Driefontein 3 and 5, Kloof 1, Venterspost North and South, Libanon, Driefontein 4, Driefontein 2 plant, Driefontein 3 plant, WRTRP pilot plant, and the land owned by Sibanye-Stillwater that was earmarked for the future development of a central processing plant, regional tailings storage facility and return water dam (together, the “WRTRP Assets”) associated with Sibanye-Stillwater’s WRTRP, subsequently renamed FWGR. This acquisition represented a significant increase in our assets. In connection with the acquisition, we issued to Sibanye-Stillwater new shares equal to 38.05% of outstanding shares and granted Sibanye-Stillwater an option to acquire up to a total of 50.1% of our shares within a period of 2 years from the effective date of the acquisition at a 10% discount to the prevailing market value. On January 8, 2020, Sibanye-Stillwater exercised the option and on January 22, 2020 subscribed for 168,158,944 DRDGOLD shares at an aggregate subscription price of R1,086 million, (R6.46 per DRDGOLD share).

The assets acquired were to be developed in two phases – Phase 1 and Phase 2.


FWGR Phase 1

Phase 1 involved the reclamation of the Driefontein 5 dump through a reconfigured Driefontein 2 plant and deposition onto the Driefontein 4 tailings storage facility. The Driefontein 4 tailings storage facility was an upstream day-wall dam with a capacity of approximately 200,000 tonnes per month. In order to increase the deposition capacity to 500 000 tonnes per month, the conversion of this dam to cyclone deposition commenced in fiscal year 2019. The conversion has been completed and this allows a deposition capacity of 500,000 tonnes per month until at least the end of calendar year 2026.

Although the Phase 1 upgrade of the Driefontein 2 Plant was essentially complete by the end of fiscal year 2019, a decision was made to bypass the mill so that further improvements to the mill liner configuration could be made. These modifications were successfully completed, and the mill was recommissioned in September 2019. A further upgrade to convert the mill to closed circuit from the open circuit to improve the grind of the material and yield more gold was completed in fiscal year 2021. A new thickener was commissioned in November 2021. The conversion yielded better grind of material with a concomitant improvement in leaching conditions and gold recovery, lower maintenance costs and increased water storage capacity in the current thickeners.

The material being reclaimed by FWGR contains high levels of copper which incurs penalty refining charges of between 1% and 5% during final refining by Rand Refinery depending on the copper content of the bullion delivered. FWGR has been allocated 98% of its gold production with 2% lost to these penalty refining charges due to the high levels of copper in the bullion delivered. To reduce these
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penalty refining charges, FWGR constructed and commissioned a copper elution plant at a cost of approximately R12 million during fiscal year 2021. On average, the plant resulted in an additional 1.2kg of gold per month which would otherwise have been lost due to penalty refining charges for the copper in its bullion.

FWGR Phase 2 expansion

The Phase 2 project is a key project for us intended to extend potential resources in the West Rand.

Phase 2 initially included the construction of a new Central Processing Plant (“CPP”) with a capacity of between 1.2 to 2.4 million tonnes per month and the equipping of the required reclamation sites and pipeline infrastructure to supply the relevant resources to the CPP. A decision was made for the expansion of DP2 rather than the construction of the CPP. The capital spent on final design work for the CPP, is also applicable to the expansion of DP2.

Phase 2 also includes the construction of a new RTSF, that we believe is necessary in order to develop FWGR as envisaged by management, the new RTSF is expected to be capable of processing 2.4 million tonnes per month with a maximum capacity of approximately 800 million tonnes. Delays in obtaining regulatory approval have affected the previously reported expected dates of the construction. An amended design of the RTSF was submitted to the Department of Water and Sanitation during FY2023. The amended design includes the build of a synthetic barrier system in place for ground water protection and a combined centre line/downstream dam wall in the early stages of the facility.

The Definitive Feasibility Study (“DFS”) for Phase 2 was completed in the 3rd quarter of fiscal year 2021 and the project was found to be economically viable in a number of scenarios.
We engaged an external consultant, Sound Mining (consultants to the mining industry specializing in surface and underground operations) to perform an independent review of the available information and studies that have been performed regarding the Phase 2 expansion project. These included:
DFS performed by DRA Global (“DRA”) (An engineering consulting company) regarding the construction of the CPP and related pumping and pipeline infrastructure;
Detail design of a new RTSF performed by Beric Robinson (engineer of record) and related capital costing performed by DRA;
Reviews of the explorations data base, Mineral Resource and Reserve estimates of FWGR assets and other future potential assets such as battery metals, uranium and other gold West Rand metal resources;
Legal tenure, permitting, environmental and compliance status; and
Economic analysis of the projects.

Based on currently available information, the Company believes that there are no material technical or geo-metallurgical risks that could significantly impact the production forecasts.

Risks associated with the Phase 2 project include obtaining regulatory approval of the amended design of the RTSF, which was submitted to the DWAS. Delays in obtaining such regulatory approval may have an adverse impact on the project timeline and capital cost estimate. We engaged the services of an external expert to assist us with engaging with the DWAS and these discussions are currently ongoing. Presentations were conducted to provide the regulator with the technical and scientific reasons for the changes to the design of the RTSF. It is anticipated that construction of the RTSF will commence in second half fiscal year 2024, dependent on regulatory approval. The plant construction is anticipated to commence 6 to 9 months later.

Financing for significant growth projects may be obtained through specific financing arrangements if required. Capital expenditure for FWGR Phase 1 was financed through our RCF (Refer to Item 18. “Financial Statements - Note 20 – Capital Management). Significant financing is required for the Phase 2 expansion which is expected to be financed through a combination of cash resources, operational cash flows and facilities as may be determined. Capital expenditure for other projects is mainly financed through operational cash flows and cash resources.

For further information on other capital investments, divestures, capital expenditure and capital commitments, see Item 4D. Property, Plant and Equipment, and Item 5B. Liquidity and Capital Resources.

ERPM

    ERPM was acquired in October 2002 and consists of an underground mine which has been under care and maintenance since fiscal year 2009. Underground mining at ERPM was halted in October 2008. On July 1, 2012, ERPM sold its surface mining assets and its 65% interest in ErgoGold to Ergo in exchange for shares in Ergo as part of the restructuring of our surface operations.

    In December 2018, ERPM concluded revised agreements to dispose certain of its underground assets to OroTree Limited (“Orotree”). The disposal of the underground mining and prospecting rights were concluded in the second half of the financial year ended June 30, 2019. Orotree did not exercise an option to purchase the underground mining infrastructure.

    In fiscal 2021, ERPM completed the decommissioning and rehabilitation of the last remaining underground mining infrastructure, being the Far East Vertical Shaft.

Crown

    Crown was acquired on September 14, 1998. Due to the depletion of ore reserves in the western Witwatersrand, the Crown plant ceased operation in March 2017 and since then substantially rehabilitated.


4B. BUSINESS OVERVIEW

    We are a South African company that holds assets engaged in surface gold tailings retreatment including exploration, extraction, processing and smelting. Our surface tailings retreatment operations, including the requisite infrastructure and metallurgical processing
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plants, are located in South Africa. Our operating footprint is unique in that it involves some of the largest concentration of gold tailings deposits in the world, situated within the city boundaries of Johannesburg and its suburbs and the far west rand of the province of Gauteng.

    DRDGOLD has arranged its operations into two wholly owned entities covering their East Rand (east of Johannesburg) and far West Rand (far west of Johannesburg) businesses. The East Rand operations are run by Ergo and the West Rand operations by FWGR. A detailed overview of the operations is provided under Item 4D. Property, Plant and Equipment and in the Technical Report Summary attached as exhibits in this annual report.

DRDGOLD’s long-term goal is to extract as much gold from its assets as possible, in a sustainable and economically viable manner. To a large extent this depends on how effectively it continues to manage its capitals. DRDGOLD uses sustainable development to direct its strategic thinking. We seek sustainable benefits in respect to financial, manufactured, natural, social and human capitals, each of which is essential to our operations. Our mining operations are dependent on electrical power supplied by Eskom. Due to insufficient generating capacity, South Africa has faced significant disruptions in electricity supply in the past and we have occasionally suffered power outages or shortages as a result. Such power outages or shortages may lead to interruptions in our production. To help address these potential shortages and avoid the potential impact that insufficient electricity supplies may have on our mining operations, we have moved forward with our Solar Plant to reduce our reliance on Eskom and the future cost of electricity. Please see “Item 4D. Property, Plant and Equipment – Capital Expenditure - Ergo” and “Item 18. Financial Statements – Note 24 – Payments made under protest” for further discussion related to shortages in electricity.

    We also aim to align and overlap the interests of each of these capitals in such a manner that an investment in any one translates into value-added increases in as many of the others as possible. We therefore seek to achieve an enduring and harmonious alignment between them, and we pursue these criteria in the feasibility analysis of each investment. We intend to explore opportunities made possible by technology, which could entail further investment in research and development (“R&D”) to improve gold recoveries even further over the long term.

    During the fiscal years presented in this Annual Report, all of our operations took place in one geographic region, namely South Africa. For a breakdown of revenue by operation, please see "Item 18. Financial Statements – Note 23 – Operating Segments."

Description of Our Mining Business

Surface tailings retreatment

    Surface tailings retreatment involves the extraction of gold from old mine dumps and slimes dams, comprising the waste material from earlier underground gold mining activities. This is done by reprocessing sand dumps and slimes dams. Sand dumps are the result of the less efficient stamp-milling process employed in earlier times. They consist of coarse-grained particles which generally contain higher quantities of gold. Sand dumps are reclaimed mechanically using front end loaders that load sand onto conveyor belts. The sand is fed onto a screen where water is added to wash the sand into a sump, from where it is pumped to the plant. Most sand dumps have already been retreated using more efficient milling methods. Lower grade slimes dams were the product of the “tube and ball mill” recovery process. The economic viability of processing this material has improved due to improved treatment methods such as the treatment of large volumes of this material. The material from the slimes dams is broken down using monitor guns that spray jets of high pressure water at the target area. The resulting slurry is then pumped to a treatment plant for processing.

Exploration

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

Our Metallurgical Plants and Processes

    A detailed review of the metallurgical plants and processes is provided under Item 4D. Property, Plant and Equipment.

Gold Market

    The gold market is relatively liquid compared to other commodity markets, and the price of gold is quoted in US dollars. Physical demand for gold is primarily for manufacturing purposes, and gold is traded on a world-wide basis. Refined gold has a variety of uses, including jewelry, electronics, dentistry, decorations, medals and official coins. In addition, central banks, financial institutions and private individuals buy, sell and hold gold bullion as an investment and as a store of value.

The use of gold as a store of value and the large quantities of gold held for this purpose in relation to annual mine production have meant that historically the potential total supply of gold has been far greater than demand. Thus, while current supply and demand play some part in determining the price of gold, this does not occur to the same extent as in the case of other commodities. Instead, the gold price has from time to time been significantly affected by macro-economic factors such as expectations of inflation, interest rates, exchange rates, changes in reserve policy by central banks and global or regional political and economic crises. In times of inflation and currency devaluation or economic uncertainty gold is often seen as a safe haven, leading to increased purchases of gold and support for its price.

Although the impact of the COVID-19 pandemic has reduced and gold prices have marginally decreased, the average gold price for fiscal year 2023 remained high due to continued economic uncertainty as the global economies attempt to recover from all the after effects of COVID-19 and the conflict in Ukraine, as well as rapidly rising inflation. In addition, we were impacted by movements in the exchange rate of the rand against the dollar as described below.

We generally take full exposure to the US dollar spot price of gold and rand/dollar exchange rate. The higher the gold price, the higher our profit margin and vice versa, subject to exchange rate fluctuations.

The average gold spot price decreased by 0.2% from $1,834 per ounce to $1,831 per ounce during fiscal year 2023 after having decreased by 1% from $1,850 per ounce to $1,834 per ounce during the fiscal year 2022 and having increased by 18% from $1,562 per
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ounce to $1,850 per ounce during the fiscal year 2021. As a result, the average gold price received by us in rands for fiscal year 2023 increased by 16% to R1,041,102 per kg compared to the previous year at R894,409 per kg and for fiscal year 2022 decreased by 3% to R894,409 per kg compared to the previous year at R917,996 per kg. The increase in the gold price received contributed to a 7% increase in our total revenue for fiscal year 2023 amounting to R5,496.3 million (2022: R5,118.5 million and 2021: R5,269.0 million). All our revenue is generated from our operations in South Africa.

    Looking ahead we believe that the global economic environment, including escalating sovereign and personal levels of debt, economic volatility and the oversupply of foreign currency, will continue to make gold attractive to investors. The supply of gold has shrunk in recent years and is likely to shrink even more due to the significantly reduced capital expenditure and development occurring in the sector. We believe that this, coupled with global economic uncertainty, is likely to provide support to the gold price in the long term.

    Until April 11, 2022, all gold we produced was sold on our behalf by Rand Refinery Proprietary Limited (Rand Refinery) in accordance with a refining agreement entered into in October 2001 and updated in July 2018. The sales price was fixed at the London afternoon fixed dollar price on the day the gold was delivered to the buyer. Before November 2020, the dollar proceeds sold were remitted to us within two days at which date the dollars were sold. Since November 2020 up to April 11, 2022, the dollars are also sold on the day the gold is delivered to the buyer. After April 11, 2022, gold is sold directly to South African Bullion banks after being refined to the required purity by Rand Refinery. The Group recognizes revenue from the sale of gold at a point in time when the gold is delivered to the South African Bullion bank on an agreed upon date, gold price and exchange rate. The gold bars which we produce consist of approximately 85% gold, 7-8% silver and the remaining balance comprises copper and other common elements. The gold bars are sent to Rand Refinery for assaying and final refining where the gold is purified to 99.9% and cast into troy ounce bars of varying weights. In exchange for this service, we pay Rand Refinery a variable refining fee and administration fees and up to April 11, 2022, a fixed marketing charge. We own 11.3% (fiscal year 2022 and 2021: 11.3%) of Rand Refinery.

Governmental regulations and their effects on our business

Common Law Mineral Rights and Statutory Mining Rights

    Prior to the introduction of the Minerals and Petroleum Resources Development Act, or MPRDA in 2002, ownership in mineral rights in South Africa could be acquired through the common law or by statute. With effect from May 1, 2004, all minerals have been placed under the custodianship of the South African government under the provisions of the MPRDA and old order proprietary rights were required to be converted to new order rights of use within certain prescribed periods, as dealt with in more detail below. Mine dumps created before the MPRDA became lawful outside of the MPRDA and do not require a mining license to be processed nor do they require the extensive rehabilitation and closure guarantees that are a feature of the MPRDA. Many of the activities to re-process a mine dump do fall under the provisions of the National Environmental Management Act though, which requires at it most basic the compilation and submission of an Environmental Impact Assessment.

Conversion and renewal of Rights under the Mineral and Petroleum Resources Development Act, 2002

    Existing old order rights were required to be converted into new order rights in order to ensure exclusive access to the mineral for which rights existed at the time of the enactment of the MPRDA. In respect of used old order mining rights, the DMRE is obliged to convert the rights if the applicant complies with certain statutory criteria. These include the submission of a mining works program, demonstrable technical and financial capability to give effect to the program, provision for environmental management and rehabilitation, and compliance with certain black economic empowerment criteria and an adequate social and labor plan. These applications had to be submitted within five years after the promulgation of the MPRDA on May 1, 2004. Similar procedures apply where we hold prospecting rights and a prospecting permit and conduct prospecting operations. Under the MPRDA mining rights are not perpetual. Upon being granted by the Minister of Mineral Resources and Energy, through the ambit of the DMRE, they remain valid for a fixed period, namely a maximum period of thirty years, after which they may be renewed for a further period of thirty years. Prospecting rights are limited to a maximum period of five years, with one further period of renewal of three years. Applications for conversion of our old order rights were submitted to the DMRE within the requisite time periods. As at June 30, 2023 and September 30, 2023 respectively, all of our Ergo operation’s old order mining rights have been converted into new order rights in terms of the MPRDA and applications to renew the converted new order mining rights have been lodged timeously.

The Broad-Based Socio-Economic Empowerment Charter

    In order to promote broad based participation in mining revenue, the MPRDA provides for a Mining Charter to be developed by the MRE Minister within six months of commencement of the MPRDA beginning May 1, 2004 and was subsequently amended in September 2010. It is used as an instrument to achieve mutually symbiotic sustainable growth and broad based and meaningful transformation of the mining and mineral industry.

The Mining Charter sets certain goals on equity participation (amount of equity participation and time frames) by historically disadvantaged South Africans of South African mining assets. It recommends that these are achieved by, among other methods, disposal of assets by mining companies to historically disadvantaged persons on a willing seller, willing buyer basis at fair market value. The goals set by the Mining Charter require each mining company to achieve 15 percent ownership by historically disadvantaged South Africans of its South African mining assets within five years and 26 percent ownership by May 1, 2014. It also sets out guidelines and goals in respect of employment equity at management level with a view to achieving 40 percent participation by historically disadvantaged persons in management and ten percent participation by women in the mining industry, each within five years from May 1, 2004. Compliance with these objectives is measured on the weighted average “scorecard” approach in accordance with a scorecard which was first published around August 2010. In April 2018, judgment was handed down by the Gauteng Division of the High Court in Pretoria against a provision in the 2010 Mining Charter regarding the “once empowered always empowered” principle.” This principle refers to whether a mining company, after the exit of a Black partner that held a stake in the company consequent to a result of a BEE transaction, continues to be BEE compliant. The judgment was appealed by the DMRE. The DMRE in August 2020, withdrew their notice to appeal to the Supreme Court of Appeal in respect of the judgment issued in April 2018 by the Pretoria High Court.


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     The Mining Charter and the related scorecard are not legally binding and, instead, simply state a public policy. However, the DMRE places significant emphasis on the compliance therewith. The Mining Charter and scorecard have a decisive effect on administrative action taken under the MPRDA.

    In recognition of the Mining Charter’s objectives of transforming the mining industry by increasing the number of black people in the industry to reflect the country’s population demographics, to empower and enable them to meaningfully participate in and sustain the growth of the economy, thereby advancing equal opportunity and equitable income distribution, we have achieved our commitment to ownership compliance with the MPRDA through our historic black economic empowerment structures which have subsequently unwound.

    The mining industry in South Africa is extensively regulated through legislation and regulations issued by government’s administrative bodies. These involve directives with respect to health and safety, mining and exploration of minerals, and managing the impact of mining operations on the environment. A change in regulatory or government policies could adversely affect our business.

    On June 15, 2017, the Reviewed Broad-Based Black Economic Empowerment Charter for the South African Mining and Minerals Industry, 2017 (“2017 Mining Charter”) was published in the Government Gazette No. 40923 of Government Notice.581. The publication of the charter was met with widespread criticism and on June 26, 2017 the Minerals Council of South Africa (previously Chamber of Mines of South Africa), applied to the Gauteng Local Division of the High Court of South Africa, Johannesburg for an urgent interdict to prevent the charter from implementation.

Key provisions included:

50% Black ownership for new prospecting rights;
30% Black ownership for mining rights (up to 11% offset for local beneficiation)
    •    For new mining rights to be issued, the provision for 1% of Earnings Before Interest, Taxes, Depreciation and Amortisation (“EBITDA”) is paid to communities and employees as a trickle dividend from the sixth year of a mining right until dividends are declared or at any point in a 12-month period where dividends are not declared

        On February 2016, The President of South Africa announced that a new mining charter would be developed and will follow a process which includes all stakeholders. The Minerals Council of South Africa subsequently postponed its court application in respect of the 2017 Mining Charter.

    On September 27, 2018 the Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018 (“Mining Charter 2018”) was published in Government Gazette No. 41934 of Government Notice No. 639 on September 27, 2018 superseding and replacing all previous charters, including Mining Charter III.

    Mining Charter 2018 requires an enduring 30% BEE interest in respect of new mining rights. It also has extensive provisions in respect of HDP representation at board and management, as well provisions relating to local procurement of goods and services. The procurement target of the total spend on services from South African companies has been set at 80% (up from 70% in Mining Charter III) and 60% of the aggregate spend thereof must be apportioned to BEE entrepreneurs.

    Key provisions of Mining Charter 2018 are:
•    the conditional acceptance of the continued consequences of previous compliance of the BEE ownership threshold of 26% in respect of existing mining rights;
•    of the 30% HDP ownership component, qualifying employees and communities are each to hold a 5% carried interest (as opposed to a free carry interest as per Mining Charter III) the cost of which may be recovered by the mining right holder from the development of the asset. the community interest in turn may be offset by way of an equity equivalent;
•    removal of the so-called 1% of EBITDA trickle dividend provided for in the 2017 Mining Charter; and
•    the removal of provisions requiring community and employee representation at board level.
•    that the continuing consequences of HDP ownership are not recognized for transfers of mining rights; and
•    that a top up of HDP ownership back to 30% is required for the renewal of existing rights.

    Subsequently, several notable developments have occurred:

     In March 2019, the Mineral Council of South Africa brought an application in the Gauteng Division of the High Court for a judicial review and setting aside of certain provisions in Mining Charter 2018.

    In June 2020, the same court ordered the Minerals Council of South Africa to join parties representing communities, trade unions and BEE entrepreneurs as a prerequisite to the continuation of the lawsuit, as they have a direct and substantial interest in the outcome of the litigation.

    On September 21, 2021, the Gauteng Division of the High Court ruled that Mining Charter 2018 is not binding subordinate legislation but an instrument of policy. This ruling affirmed that the MRE Minister was not entitled to make law through the Mining Charter 2018 to require 30% HDP ownership for the renewal of existing mining rights.

    On November 23, 2021, the MRE Minister confirmed that the MRE Ministery will not appeal the ruling made by the Gauteng Division of the High Court of South Africa.

Mine Health and Safety Regulation

    The South African Mine Health and Safety Act, 1996 (as amended), or the Mine Health and Safety Act (“MHSA”), came into effect in January 1997. The principal objective of the MHSA is to improve health and safety at South African mines by inter alia, providing for effective monitoring of health and safety conditions and the enforcement of health and safety measures at our mines. To this end, the MHSA imposes various duties on us at our mines and grants the authorities broad powers to, among other things, close unsafe mines and order corrective action relating to health and safety matters. In the event of any future accidents at any of our mines, regulatory authorities
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could take steps which could increase our costs and/or reduce our production capacity. The Act was amended in 2009 and the amendments to the Act dealt with inter alia the stoppage of production and increased punitive measures including increased financial fines and legal liability of mine management. Some of the more important provisions in the 2009 amendment bill are the insertion of section 50(7A) that places an obligation on an inspector to impose a prohibition on the further functioning of a site where a person’s death, serious injury, illness to a person or a health threatening occurrence has occurred; a new section 86A(1) creating a new offence for any person who contravenes or fails to comply with the provisions of the MHSA thereby causing a person’s death, serious injury or illness to a person. Subsection (3) further provides that (a) the “fact that the person issued instructions prohibiting the performance or an omission is not in itself sufficient proof that all reasonable steps were taken to prevent the performance or omission”; and that (b) “the defense of ignorance or mistake by any person accused cannot be permitted”; or that (c) “the defense that the death of a person, injury, illness or endangerment was caused by the performance or an omission of any individual within the employ of the employer may not be admitted”; section 86A(2) creating an offence of vicarious liability for the employer where a Chief Executive Officer, manager, agent or employee of the employer committed an offence and the employer either connived at or permitted the performance or an omission by the Chief Executive Officer, manager, agent or employee concerned; or did not take all reasonable steps to prevent the performance or an omission. The maximum fines were also increased. Any owner convicted in terms of section 86 or 86A may be sentenced to “withdrawal or suspension of the permit” or to a fine of R3 million or a period of imprisonment not exceeding five years or to both such fine and imprisonment, while the maximum fines for other offences and for administrative fines have all been increased, with the highest being R1 million.

    Under the South African Compensation for Occupational Injuries and Diseases Act, 1993 (as amended), or COID Act, employers are required to contribute to a fund specifically created for the purpose of compensating employees or their dependents for disability or death arising in the course of their work. Employees who are incapacitated in the course of their work have no claim for compensation directly from the employer and must claim compensation from the COID Act fund. Employees are entitled to compensation without having to prove that the injury or disease was caused by negligence on the part of the employer, although if negligence is involved, increased compensation may be payable by this fund. The COID Act relieves employers of the prospect of costly damages but does not relieve employers from liability for negligent acts caused to third parties outside the scope of employment. In fiscal year 2023, we contributed approximately R6.1 million under the COID Act (2022: R5.9 million and 2021: R4.3 million) to a multi-employer industry fund administered by Rand Mutual Assurance Limited.

    Under the Occupational Diseases in Mines and Works Act, 1973 (as amended), or the Occupational Diseases Act, the multi-employer fund pays compensation to employees of mines performing “risk work,” usually in circumstances where the employee is exposed to dust, gases, vapors, chemical substances or other working conditions which are potentially harmful, or if the employee contracts a “compensatable disease,” which includes pneumoconiosis, tuberculosis, or a permanent obstruction of the airways. No employee is entitled to benefits under the Occupational Diseases Act for any disease for which compensation has been received or is still to be received under the COID Act. These payment requirements are based on a combination of the employee costs and claims made during the fiscal year.

    Uranium and radon are often encountered during the ordinary course of gold mining operations in South Africa, and present potential risks for radiation exposure of workers at those operations and the public to radiation in the nearby vicinity. We monitor our uranium and radon emissions for compliance with all local laws and regulations pertaining to uranium and radon management and under the current legislative exposure limits prescribed for workers and the public, under the Nuclear Energy Act, 1999 (as amended) and Regulations from the National Nuclear Regulator.

Environmental Regulation

Managing the impact of mining on the environment is extensively regulated by statute in South Africa. Recent statutory enactments set compliance standards both generally, in the case of the National Environmental Management Act, and in respect of specific areas of environment impact, as in the case of the Air Quality Act 2004, the National Water Act (managing effluent), and the Nuclear Regulator Act 1999. Liability for environmental damage is also extended to impose personal liability on managers and directors of mining corporations that are found to have violated applicable laws.
The impact on the environment by mining operations is extensively regulated by the MPRDA. The MPRDA has onerous provisions for personal liability of directors of companies whose mining operations have an unacceptable impact on the environment.
Mining companies are also required to demonstrate both the technical and financial ability to sustain an ongoing environmental management program, or EMP, and achieve ultimate rehabilitation, the particulars of which are to be incorporated in an EMP. This program is required to be submitted and approved by the DMRE as a prerequisite for the issue of a new order mining right. Various funding mechanisms are in place, including trust funds, guarantees and concurrent rehabilitation budgets, to fund the rehabilitation liability.
The MPRDA imposes specific, ongoing environmental monitoring and financial reporting obligations on the holders of mining rights.

    We believe that our environmental risks have been addressed in EMPs which have been submitted to the DMRE for approval. Additionally, key environmental issues have been prioritized and are being addressed through active management input and support as well as progress measured in terms of activity schedules and timescales determined for each activity.

    Our existing reporting and controls framework is consistent with the additional reporting and assessment requirements of the MPRDA.

    Financial Provision for Rehabilitation

    We are required to make financial provision for the cost of mine closure and post-closure rehabilitation, including monitoring once the mining operations cease. This can be done through the use of rehabilitation trusts or through financial guarantees issued to the DMRE. During fiscal year 2022, a change in method was decided upon as providing for environmental rehabilitation from funding in a specific rehabilitation trust to financial guarantees which is an allowed method in terms of the National Environmental Management Act. The financial guarantees are issued through approved insurance products from Guardrisk Insurance Company Limited (“GICL”). All the required approvals for the change in method and transfer of the rehabilitation trust funds were obtained from the DMRE and a thorough consideration of tax and legal impacts were completed prior to the funds being transferred to GICL directly from the rehabilitation trust where the funds were previously held. As of June 30, 2023, we held a total of R630.6 million (2022: R589.8 million) in funds held in
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insurance instruments after the transfer, of R579.5 million from the rehabilitation trusts was completed in fiscal 2022. As at June 30, 2023 guarantees amounting to R951.8 million (2022: R614.0 million) were issued to the DMRE. As of June 30, 2023, subsequent to the transfer to GICL, the balance in the rehabilitation trust was R nil (2022: R nil million).

    The provision for environmental rehabilitation for the group was R562.1 million at June 30, 2023, compared to R517.7 million at June 30, 2022.

    New Financial Provisioning Regulations (“FPR”) were promulgated on November 20, 2015 under the National Environmental Management Act, 107 of 1998 (“NEMA”) by the Department of Forestry, Fisheries and the Environment (“DFFE”). Under the FPRs to be implemented by the DMRE, existing environmental rehabilitation trust funds, of which DRDGOLD has Rnil million, may be used only for post closure activities and may no longer be utilized for their intended purpose of concurrent and final rehabilitation on closure. As a result, new methods for provisions will have to be made for these activities.

    Several further proposed amendments to the FPRs, (“Proposed Amendments”) were published subsequently. The latest Proposed Amendments were published in August 2021 which, inter alia, extends the compliance with these regulations to three months following the fiscal year end June 30, 2023.

    The Proposed Amendments, in their current form and which are still subject to the approval of the DMRE and Treasury, allow under certain circumstances for the withdrawal against financial provision (which is currently not contemplated in the FPR). It is therefore uncertain whether these provisions relating to withdrawal will remain in their current form, or at all.

    Regulation 5(4) of the Proposed Amendments states that the determination of financial provision must be undertaken by a specialist, which according to the definitions listed in the Proposed Amendments is an “independent person”. Regulation 10 of the Proposed Amendments further requires the annual review and re-assessment of financial provision by an independent specialist, which in terms of Regulation 11 of the Proposed Amendments must also be audited by an independent auditor. The Proposed Amendments do not require that the annual review and re-assessment of financial provision be audited by a financial auditor.
4C. ORGANIZATIONAL STRUCTURE

    The following chart shows our principal subsidiaries as of June 30, 2023 and as of September 30, 2023 respectively. All of our subsidiaries are incorporated in South Africa. Our voting interest in each of our subsidiaries are equal to our ownership interests. We hold the majority of our subsidiaries directly or indirectly as indicated below. Refer to Exhibit 8.1 for a list of our significant subsidiaries.

ownershipdiagramm_updateda.jpg
1    Sibanye Gold Proprietary Limited trading as Sibanye-Stillwater.
2    Includes shareholding by subsidiary, EMO of 0.45% and shareholding by directors of the Company of 0.15%. Such shareholding is classified as non-public.
Ergo was previously owned by Ergo Mining Operations (Proprietary) Limited (EMO). EMO was 74% owned by DRDGOLD Limited and 26% by our broad-based black economic empowerment (BBBEE) partners – Khumo Gold SPV Proprietary Limited (Khumo) and the DRDSA Empowerment Trust. In FY2015, an agreement with our BBBEE partners entailing a roll-up of shareholding included the substitution of their 26% shareholding in EMO for 8.1% and 2.4% shareholding in DRDGOLD Limited respectively. At 30 June 2023, Khumo and the DRDSA Empowerment Trust held nil shares in DRDGOLD.

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4D. PROPERTY, PLANT AND EQUIPMENT

Description of Significant Subsidiaries' Properties and Mining Operations

Mineral Reserves and Mineral Resources summary disclosures

    The financial and technical assumptions underlying the Mineral Resources and Mineral Reserves estimations contained in this report and in the Technical Report Summary or Summaries (“TRSs”) included as exhibits in this report are current as at June 30, 2023, the period covered by each of the respective reports. Such assumptions rely on various factors that may change after the reporting period, including as a result of operational reviews which the Company undertakes from time to time and when necessary. The TRSs which are filed as exhibits to this report in accordance with Item 601(86) and Item 1300 of Regulation S-K have been prepared by the Qualified Persons named therein'.
    In South Africa, we are legally required to publicly report Mineral Reserves and Mineral Resources in compliance with the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, or SAMREC Code. South Africa is a member of CRIRSCO.    

The following information is detailed for material properties of the Companies in Item 4D:
History of operations
Summary of operations
Properties and location
Geology
Mining method
Mineral Processing and Recovery Methods
Infrastructure
Exploration
Environmental and Closure Aspects
Water usage and reduction in use of potable water
Water pollution
Environmental rehabilitation closure providing and funding
Legal aspects and permitting
Production
Capital Expenditure
Risks inherent in estimates

History of operations

    For a detailed review of the history of the operations, refer to Item 4A. History and development of the Company.

Summary of operations

    DRDGOLD owns 100% of Ergo and 100% of FWGR. Both are managed surface tailings retreatment operations producing gold. Ergo operates across central and east Johannesburg, within the Gauteng Province and FWGR in Carletonville on the far West Rand of the Gauteng Province. In order to improve synergies, effect cost savings and establish a simpler group structure, DRDGOLD restructured the Group’s surface operations (Crown, ERPM’s Cason Dump surface operation and ErgoGold) into Ergo with effect from July 1, 2012. On July 31, 2018, DRDGOLD acquired WRTRP Assets, which are surface gold processing assets and tailing storage facilities associated with Sibanye-Stillwater’s WRTRP, and subsequently renamed it FWGR.

    DRDGOLD also owns 100% ERPM. In December 2018, ERPM concluded revised agreements to dispose certain of its underground assets to OroTree Limited (“OroTree”) which included the disposal of ERPM’s underground mining and prospecting rights. Underground mining infrastructure was not sold. ERPM’s underground gold mining infrastructure is under care and maintenance.

    At June 30, 2023, Ergo employed 744 full-time employees. In addition, specialist service providers deployed a further 1856 employees to our operations bringing the total number of in-house and outsourced employees to 2,600 at June 30, 2023 (at June 30, 2022: 2,440; at June 30, 2021: 2,266). At June 30, 2023, FWGR employed 153 full-time employees. In addition, specialist service providers deployed a further 299 employees to our operations bringing the total number of in-house and outsourced employees to 452 at June 30, 2023 (at June 30, 2022: 491; at June 30, 2021: 497).

DRDGOLD has numerous Surface, Mining and Prospecting Rights and ownership of the surface rights and mine dumps vests in various legal entities. All required operating permit and licenses have been obtained and are in good standing with the regulators. More detailed information on the various properties mineral tile can be found under the “Legal aspects and permitting” here below.

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Below is geographical representation of the location on Ergo and FWGR within South Africa:
item4b_geographical002a.jpg

Summary of production

The following table sets out aggregate production for Ergo and FWGR for the last three fiscal years:
Total aggregate gold production202320222021
Gold produced (ounces)169,820183,902183,999
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DRDGOLD's summary Mineral Resources (Exclusive of Mineral Reserves) are set forth in the tables below:
Mineral Resources (Exclusive of Mineral Reserves) as of June 30, 2023
Measured ResourcesIndicated ResourcesInferred ResourcesTotal
TonsGradeGold ContentTonsGradeGold ContentTonsGradeGold ContentTonsGradeGold Content
(mill)(g/tonne)('m ozs)(tonnes)(mill)(g/tonne)('m ozs)(tonnes)(mill)(g/tonne)('m ozs)(tonnes)(mill)(g/tonne)('m ozs)(tonnes)
Ergo66.040.260.5517.17375.410.253.0693.8521.320.240.165.12462.770.273.77116.14
FWGR 1
Total66.040.260.5517.17375.410.253.0693.8521.320.240.165.12462.770.273.77116.14
1 Mineral Resources when stated exclusive of Mineral Reserves amount to zero for FWGR, because all of the Mineral Resources will be exploited and converted to Mineral Reserves
2 For the fiscal year ended June 30, 2023, Mineral Resources increased by approximately 1% (2022: 3.73m ozs). The increase in Mineral Resources resulted from updated survey results.
Notes:
The figures contained in the tables are rounded, which may result in minor computational discrepancies which are not deemed to be significant.
Mineral Resources have been reported in accordance with the classification criteria of Subpart 1300 of Regulation S-K.
These Mineral Resources are stated inclusive of Mineral Reserves
In situ Mineral Resource estimate reported according to S-K 1300 requirements
No geological losses applied
DRDGOLD's summary Mineral Reserves are set forth in the tables below:
Mineral Reserves as of June 30, 2023
Proved ReservesProbable ReservesTotal Reserves
TonsGradeGold ContentTonsGradeGold ContentTonsGradeGold Content
(mill)(g/tonne)('m ozs)(tonnes)(mill)(g/tonne)('m ozs)(tonnes)(mill)(g/tonne)('m ozs)(tonnes)
Ergo185.290.311.8557.44196.170.251.6049.04381.460.283.45106.48
FWGR208.990.332.2068.5812.880.330.144.24221.870.332.3472.83
Total394.280.324.05126.02209.050.251.7453.28603.330.305.79179.30
Notes:
The figures contained in the tables are rounded, which may result in minor computational discrepancies which are not deemed to be significant.
The Mineral Reserves constitute the feed to the gold plants
The Mineral Reserves are stated at a price of ZAR1,081,261/kg
The input studies are to a PFS level of accuracy
No mining losses or dilution has been applied in the conversion process nor has a mine call factor been applied.
Tons and grade Run-of-Mine (RoM) as delivered to the plant
The Mineral Reserve estimates contained herein may be subject to legal, political, environmental or other risks that could materially affect the potential development of such Mineral Reserves
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Properties and location

    The Ergo plant is located approximately 43 miles (70 kilometers) east of the Johannesburg’s central business district in the province of Gauteng on land owned by Ergo. Access to the Ergo plant is via the Ergo Road on the N17 Johannesburg-Springs motorway.

    Following the restructuring of the Crown operations, which consisted of three separate locations, City Deep, Crown Mines and Knights, into a single surface retreatment operation in Ergo, these mining rights were transferred to Ergo in March 2014.The Crown Mines plant and sites were closed down in March 2017 and rehabilitated.

    The City Deep operation is located on the West Wits line within the Central Goldfields of the Witwatersrand Basin, approximately 3 miles (5 kilometers) south-east of the Johannesburg central business district in the province of Gauteng. Access is via the Heidelberg Road on the M2 Johannesburg-Germiston motorway. The City Deep plant continues to operate as a pump/milling station feeding the metallurgical plant.
    
    The Knights operation is located at Stanley and Knights Road Germiston off the R29 Main Reef Road. The Knights plant was reconfigured from an operating metallurgical plant to operate as a pump/milling station from April 1, 2023.

As of June 30, 2023 and September 30, 2023, no material encumbrances exist on Ergo's property.

As of June 30, 2023, the net book value of Ergo’s mining assets was R2,419.1 million (2022: R1,707.0 million).

Below is a geographical representation of the location of individual material properties of Ergo and FWGR:

item4blocationa.jpg


    FWGR’s assets consists of the currently operational Driefontein 2 plant (“DP2”), Driefontein 3 plant (“DP3”), Driefontein 4 TSF which is a current active tailings deposition facility, pilot plant, which is a moveable LogiProc pilot plant established to test the processes, techniques and assumptions made in the definitive level design of the full scale retreatment of dumps. FWGR currently own six tailings storage facilities on the West Rand between Roodepoort and Carletonville, approximately 70km South West of Johannesburg (Figure A).

    There are an additional four TSFs which will be transferred from Sibanye-Stillwater to FWGR once no longer required by the existing operations (Available TSFs). These are Driefontein 1, and 2, Kloof 2 and Leeudoorn. Numerous other TSFs are potentially available in the area for future reclamation. FWGR also owns land on which the Central Processing Plant (“CPP”) and RTSF and the return water dam were originally planned to be built.

As of June 30, 2023, and September 30, 2023, no material encumbrances exist on FWGR's property.
    
    At June 30, 2023, the net book value of FWGR’s mining assets was R1,464.3 million (2022: R1,340.6 million).

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Surface reclamation operations including the treatment of sand from ERPM’s Cason Dump, was conducted through the Knights metallurgical plant, tailings deposition facilities and associated facilities until ERPM’s surface mining assets were transferred to Ergo as part of the restructuring which took place on July 1, 2012.

As of June 30, 2023, and September 30, 2023, no encumbrances exist on ERPM's property.
    
At June 30, 2023, the net book value of ERPM’s mining assets was zero (2022: zero).


Geology

    DRDGOLD’s surface deposits are the residue (“tailings”) of the mining and metallurgical process recovery of gold and uranium ores of the gold bearing late Archaean (2.7Ga to 3.2Ga) Witwatersrand sedimentary basin. The Witwatersrand Basin is the largest gold bearing metallogenic province globally and is unconformably overlain by units of the Ventersdorp Supergroup (~2.7Ga), the Transvaal Supergroup (~2.6Ga), and the Karoo Supergroup (~280Ma).
    
    The deposits consist of gold, uranium and sulphur-bearing sand dumps and slimes dams, and the composition reflects the major constituents of the Witwatersrand Basin: quartz (70%-80%), mica (10%), chlorite and chloritoid (9%-18%) and pyrite (1%-2%). Gold, uranium, zirconium and chromium may be minor constituents averaging <100ppm each. Deposits possess characteristics, determined by the geometry, material source and processing plants in which the original ores were processed.

Mining method

    Material processed by Ergo is sourced from surface sources namely, sand and slime and are reclaimed separately. FWGR only source is slime.

No selective mining takes place on a dump with the entire TSF being processed. This is due to the following:
No place exists on mining sites to dump below cut-off grade material;
The mining method is not conducive to selective mining; and
The operation is also a rehabilitation exercise, and all mineralized material must be removed from the site, and it is, therefore, economically beneficial to process all material, even low-grade material.
    TSFs are mined through hydro-mining using high-pressure jets of water to dislodge tailings material or move sediment for transportation as a slurry to processing plants. The hydro-mining removes the tailings material from the top of a TSF to the natural ground level in 15m layers. Hydraulic mining provides slurry feedstock to the plants continuously. Ergo also uses mechanical front end loaders to load slimes/sand material. Material is re-pulped with water and pumped to the plants.

Mineral Processing and Recovery Methods

    Our metallurgical plants use carbon-in-leach (“CIL”) metallurgical processes to recover gold from slurry.

The surface sources have generally undergone a complex depositional history resulting in grade variations associated with improvements in plant recovery over the period the material was deposited. At Ergo, our gold producing metallurgical plant, we have an installed capacity to treat approximately 25 million tons of material per year based on 92% availability and are fully operational. All of the plants have undergone various modifications during recent years resulting in significant changes to the processing circuits. The City Deep plant continues to operate as a pump/milling station feeding the metallurgical plants. At FWGR, DP2 has a installed capacity to treat approximately 7.2 million tons of material per year.

The re-pulped slime is pumped to the plant and the reclaimed material is treated using screens, cyclones, ball mills and Carbon-in-Leach, or CIL, technology to extract the gold.

Set forth below is a description of each of our plants in operation:

    Ergo Plant: Commissioned by Anglo American Corporation in 1977, became part of AngloGold Ashanti in 1998 from which it was acquired for a consideration of R42.8 million in 2007. The remaining five CIL tanks were refurbished during fiscal year 2015 to increase capacity to treat up to 25.2Mt per year.

    Knights Plant: Commissioned in 1988, this surface/underground plant comprises a circuit including screening, primary cycloning, milling in closed circuit with hydrocyclones, thickening, oxygen preconditioning, CIL, elution, electro-winning and smelting to doré. The Knights plant, although historically part of the Crown operation, is located further east and considerably closer to the Brakpan/Withok TSF. Due to the location of the Knights plant it deposits waste on the Brakpan/Withok TSF. The Knights plant has an installed capacity to treat an estimated 3.6Mt per year. During fiscal year 2023 the Knights plant was reconfigured to operate as a milling and pump station and feeds material to the Ergo plant.
    
    City Deep Plant: Commissioned in 1987, this surface/underground plant comprises a circuit including screening, primary, secondary and tertiary cycloning in closed circuit milling, thickening, oxygen preconditioning, CIL, elution and zinc precipitation followed by calcining and smelting to doré. Retreatment continued at the City Deep Plant until the plant was decommissioned in August 2013 to operate as a milling and pump station and is currently pumping material to the Ergo Plant for the final extraction of gold.
    
    Driefontein 2 Plant: Recommissioned in fiscal year 2019, this surface/underground plant was refurbished and modifications made to the milling and cyclone circuit to ensure the production of a finer grind for gold liberation.


Infrastructure

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    The hydro-mining, reprocessing and re-deposition of tailings material requires a network of pipes. Slurry pipelines will be needed from the hydro-mining sites at the TSFs to the plants and tailings pipelines from the plants to the respective depositional facilities. High pressure water pipelines are necessary to supply the mining operations while separate low-pressure water pipes are needed for returning water to the plants from return water dams at the various TSFs. These have all been adequately designed and included in the LoM planning.

    Ergo currently uses the Brakpan/Withok tailings facility as deposition facility, and FWGR, the Driefontein 4 TSF. Ergo requires the implementation of the final design of the Brakpan/Withok TSF to receive an additional 430Mt in order to deliver into its life of mine. FWGR requires the RTSF to ensure adequate storage facilities for the long-term deposition of all tailings arising from FWGR operations.

     Designs for the final life stage of the Brakpan/Withok TSF are being reviewed and we are seeking to obtain the last regulatory approval for the final life design of the Brakpan/Withok TSF. Construction of a RTSF is scheduled to commence during the first half of the 2024 calendar year, with a depositional capacity of 600ktpm available in the second half of 2026, increasing to 1.2Mtpm in 2027. The Sibanye-Stillwater Leeudoorn tailings storage facility is evaluated as a viable interim alternative to the RTSF, should the timing of the RTSF construction be delayed, the Leeudoorn TSF, which is owned by Sibanye, can be made available to FWGR until such a time that the RTSF can accommodate new arisings. The RTSF will have sufficient storage capacity to also accommodate new arisings at a rate of 1.2Mtpm from the mining of available TSFs in the area well into the future.

    Both operations obtain their power ultimately from the Eskom grid and therefore are currently exposed to the material risks associated with Eskom. Ergo operations receive power from several substations and mining sites are supplied power via several separate feeds. Currently, the Ergo plant demands peaks at 18MVa and the Brakpan/Withok Tailings Storage facility at 8MVa. Ergo operates 24-7-365 and the plant receives power at 6.6KV via Eskom’s 88kV Vlakfontein distribution. At FWGR, power is currently supplied from Eskom’s 132kV and 44kV grid to various Sibanye owned gold mines in the vicinity of FWGR’s operations. The power requirement of FWGR remains within the current surplus capacity of the Driefontein and Kloof mining complexes.

Exploration

    Exploration and development activity at Ergo involves the drilling of surface dumps and evaluating the potential gold bearing surface material in the determination of its Mineral Resources and Mineral Reserves. These exploration programmes comprise:
surveying to determine physical dimensions and volumes;
auger or reverse circulation drilling programs to permit sampling for gold content and mapping of the gold distribution;
metallurgical and flow sheet development test work; and
tailings toxicity tests and specific gravity determination.

Environmental and Closure Aspects

In accordance with South African mining legislation, all mining companies are required to rehabilitate the land on which they work to a determined standard for alternative use. DRDGOLD’s business involves the reclamation of previously discarded material deposited, in many cases, by other companies, most of which are no longer in business. As a result we deal with legacy environmental issues.

Before we embark on new mining projects, we undertake an environmental authorization process which is performed by external consulting specialists that conduct detailed specialist studies, an environmental impact assessment and environmental management programme (“EMP”) for the management of these projects. These reports are discussed and reviewed by our stakeholders through an open public participation process. Through this process, we are able to identify, address and minimize the effects of our activities on the environment and identify and mitigate the potential impacts our activities may have on surrounding communities and the receiving environment. Our environmental management systems and policies have been designed in compliance with South Africa’s National Environmental Management Act 107 of 1998 and associated regulations. Internal and external environmental audits are performed annually and recorded in a database to ensure compliance. Our EMP encompasses all the activities of our operations and assesses the environmental impacts of mining at reclamation sites, plants and tailings storage facilities. It also outlines the closure process, including financial provisions.

At Ergo, environmental management and compliance is further assisted by the in–house developed electronic monitoring system (Compliance Management Tool) that incorporates all existing Environmental Impact Assessments (“EIAs”), EMPs, Mining Right Conversions, Performance Assessments and Social and Labor Plans (“SLPs”) associated with each mining right. At Ergo the monitoring system incorporates existing EMPs and water use licenses. The existing and most recent studies are used to supplement the management components with regards to the mining right boundaries and its required compliance parameters. The individual management items are integrated to provide a holistic overview of the state of each of the mining right areas. Spatial data pertaining to the mining right boundaries is stored onto a central database and is utilized to create a live map which illustrates the mining right area and various environmental monitoring systems.

The Group actively manages and monitors the consumption of natural resources (including potable water and energy) at monthly and weekly meetings. This entails the analysis of trends to identify excess use and discuss various focus areas to ensure responsible natural resource usage. The major environmental risks are associated with dust from various reclamation sites, and effective management of relocated process material on certain tailings facilities. At Ergo, Municipal infrastructure as well as commercial and residential developments have encroached towards the Ergo operation.

The impact of nuisance dust fallout on the surrounding environment and community is addressed through a comprehensive monitoring network including appropriate community involvement. The monitoring reports are sent to regulators, municipalities, and interested and affected parties. For a residential zoned monitoring bucket, an exceedance is defined as above the dust limit of 600mg/m2/day. For a non-residential zoned monitoring bucket, an exceedance is defined as above the dust limit of 1200mg/m2/day.

Mitigation measures include environmentally friendly dust suppressants applied to high impact areas, active wetting of access roads by water bowsers, and a network of high velocity sprayers on our active TSFs. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation of the tailings followed by the application of lime, to reduce the natural acidic conditions, and fertilizer to assist in the growth of vegetation planted on the tailings facility.

Water usage and reduction in use of potable water
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    The primary uses for water are in the plants and hydro-mining for the various TSFs. Ergo constructed a central water reticulation plant in 2017 to give it the ability to deliver water to all corners of the operation and return it through a fully integrated closed system. Between 60%- 70% of all process water make up at Ergo is drawn from the Brakpan/Withok TSF to various reclamation sites by way of return water columns. Another 15%-20% water is drawn from lakes and dams in the region in terms of the requisite extraction licenses. A further 6%-11% of process water top up needs are from treated underground acid mine drainage (“AMD”) drawn from Trans-Caledon Tunnel Authority (“TCTA”). DRDGOLD has the right to use up to 30 Ml of AMD water per day. Less than 1% of water is drawn from a wastewater treatment facility. Potable water is used only where the sensitivity of equipment requires it and for certain early stages of irrigation to settle in newly established vegetation on TSFs. At FWGR, all water harvested from Driefontein 4 TSF is used. This amounts to approximately 49% of process water requirements. The balance is made up from underground mine dewatering. Water use licenses are available for the pumping of water from underground workings at Kloof 10 shaft and Driefontein 10 shaft, and the consumption planned from these shafts will not exceed the pumping rates approved in the respective WULs. Potable water consumption is limited to drinking and change houses and flocculant make up for usage in the plant.

Water pollution

    A closed water system is designed to avoid having to treat water or having to discharge into surface water courses. Overflows of return water dams may, depending on their location, pollute surrounding streams and wetlands. Ergo and FWGR have an ongoing monitoring program to ensure that its water balances (in its reticulation system, on its tailings and its return water dams) are maintained at levels that are sensitive to the capacity of return water dams. Any water discharge is contained through paddocks on reclaimed sites, storm water run-off and water systems that pump rain or excess water into the system. Another possible source water discharge is attributed mainly to compromised or aging pipes that may cause leaks. An external expert continuously monitors pipelines to timeously identify water leaks to minimize water seepages. A comprehensive maintenance plan is in place to replace compromised pipelines.

ERPM acid mine drainage

    There is a regular ingress of water into the underground workings of ERPM, which was contained by continuous pumping from the underground section. Studies on the estimates of the probable rate of rise of water have been inconsistent, with certain theories suggesting that the underground water might reach a natural subterranean equilibrium, whilst other theories maintain that the water could decant or surface.
    
    The government appointed TCTA to construct a partial treatment plant (neutralisation plant) to prevent the ground water being contaminated. TCTA completed the construction of the neutralisation plant for the Central Basin and commenced treatment during July 2014. As part of the heads of agreement signed in December 2012 between EMO, Ergo, ERPM and TCTA, sludge emanating from this plant is co-disposed onto the Brakpan/Withok TSF together with processed material from the Ergo plant. Partially treated water is then discharged by TCTA into the Elsburg Spruit. This agreement includes the granting of access to the underground water basin through one of ERPM shafts and the rental of a site onto which it constructed its neutralisation plant. In exchange, Ergo and its associate companies including ERPM have a set-off against any future directives to make any contribution toward costs or capital of up to R250 million. Through this agreement, Ergo also secured the right to purchase up to 30 ML of partially treated AMD, a day, from TCTA at cost, in order to reduce Ergo’s reliance on potable water for mining and processing purposes.

Refer Item 18. ‘‘Financial Statements - Note 26.2 Contingent liability for environmental rehabilitation” for disclosures on potential pollution impact on ground water through seepage

Environmental rehabilitation closure providing and funding

While the ultimate amount of rehabilitation costs to be incurred is uncertain, we have estimated that the total cost for Ergo, in current monetary terms as at June 30, 2023 is approximately R444.2 million (2022: R414.4 million). As at June 30, 2023, a total of R141.9 million (2022: R132.8million) is held in insurance instruments in the Guardrisk Cell Captive, as security for financial guarantees issued for rehabilitation costs.

We have estimated that the total cost for FWGR, in current monetary terms as at June 30, 2023 is approximately R109.0 million (2022: R93.9 million). As at June 30, 2023, a total of R474.8 million (2022: R444.1 million) is held in insurance instruments in the Guardrisk Cell Captive, as security for financial guarantees issued for rehabilitation costs.

    We have estimated that as at June 30, 2023 the present discounted value of the total cost of rehabilitation for ERPM is approximately R9.0 million (2022: R9.3 million). A total of R13.9 million (2022: R51.6 million) is held in insurance instruments and is available for the settlement of these rehabilitation costs.

Legal aspects and permitting

Tailings storage facilities, in most instances, are considered movable and capable of being owned under the common law separately from land. As such, they are distinguishable from underground minerals, which can no longer be individually owned in South African but in respect of which the Department of Mineral Resources and Energy (DMRE) may issue Mining Rights in terms of the MPRDA of 2002 (MPRDA), as amended. The construct of the MPRDA caused the minerals in certain TSFs to therefore fall outside the regulatory reach of the MPRDA. The transitional arrangements of the MPRDA provided for existing operations, however, to convert old order rights (Mining Licenses held under the previous dispensation) to new order rights. Ergo successfully converted its old order licenses to Mining Rights and is seeking to consolidate them into a single mining right. In terms of reserves in TSFs over which are owned by common law and are not covered by a Mining right, Environmental and Waste Management Approvals are obtained from the DMRE for the retreatment of such TSFs.
For an exploration project, a prospecting right, valid for five years, is issued, and for a mining operation, a mining right is valid for up to 30 years, is issued. The prospecting right, which is conducted in terms of a Prospecting Work Program, is renewable for a further three years. The mining right is undertaken in terms of the Mining Works Program, Social and Labor Plan, and an approved Environmental
28


Management Program, which can be renewed for a further 30 years. A prospecting right or mining right may be cancelled or suspended subject to Section 47 of the MPRDA.

Mining Rights and Prospecting Rights held are listed under the Ergo Mining Proprietary Limited subsidiary. DRDGOLD has numerous Surface, Mining and Prospecting Rights and ownership of the surface rights and mine dumps vests in various legal entities.

Ergo is in the process of a consolidation of its mining rights and as such has applied to extend the mining period for a further 30 years through its consolidated mine works program. The period of 30 years is the maximum period allowable for a Mining Right renewal as detailed in the MPRDA, as amended. A mining right in respect of which an application for renewal has been lodged shall despite its expiry date remain in force until such time as such application has been granted or refused. Water use licenses are applied for as and when required to remain compliant with relevant legislation. Ergo complies with all the conditions for renewal and has no reason to believe that the submitted renewals would not be granted. Ergo is in constant communication with the DMRE and is submitting the required information as per their requests to finalize these renewal applications.

The Mineral Resources and Mineral Reserves held by FWGR were acquired from Sibanye Gold Proprietary Limited, a subsidiary of Sibanye-Stillwater Limited, in a transaction in which common law ownership was established over the various TSFs containing the said Mineral Resources and Mineral Reserves, and control was established by Sibanye-Stillwater over DRDGOLD. FWGR conducts its activities inter alia in accordance with Environmental Approvals (“EAs”) and the provisions of the Mine Health and Safety regulations. A Use and Access Agreement with Sibanye Gold articulates the various rights, permits and licenses held by Sibanye Gold in terms of which FWGR operates, pending the transfer to FWGR of those that are transferable.

FWGR entered into a smelting agreement with Sibanye-Stillwater to smelt and recover gold from gold loaded carbon produced at the DP2 plant, and deliver the gold to Rand Refinery. In exchange for this service, Sibanye-Stillwater receives a fee based on the smelting costs plus 10% of the smelting costs. Rand Refinery performs the final refinement of all gold produced. Up to April 11, 2022, FWGR also engaged its fellow subsidiary, Ergo Mining Proprietary Limited, to act as its agent and representative and to enter into a refining services arrangement with Rand Refinery for the sale, marketing and export of the refined gold of the Company. After April 11, 2022, FWGR continued to engage Ergo Mining Proprietary Limited, to act as its agent and representative to sell gold directly to the South African Bullion banks. This agreement is expected to be in place until FWGR obtains its own precious metals beneficiation license and its own depository account with Rand Refinery.

DRDGOLD and its subsidiaries own the rights to some of the properties where the Mineral Resources are located. In other cases, agreements are in place with the landowners to mine the dump material and rehabilitate the land for other uses. The details of the related surface rights are not material for the purpose of this report. The necessary agreements are in place for all properties in the LoM plan.

Impediments on rights to mine

Grootvlei Complex

Ergo has a mining right over Grootvlei 6L14 dump via mining right GP158. Ergo's application for the renewal of its prospecting rights over Grootvlei dumps 6L16, 6L17 and 6L17A to the DMRE was granted in July 2022. During the 2023 financial year, an external party raised a conflicting claim of common law ownership of 6L16, 6L17 and 6L17A TSFs. Although the claim was on common law ownership and no attempt has been made to set aside the prospecting rights over the TSFs, the Grootvlei TSFs have been excluded from Mineral Reserves and the life of mine, and included in Mineral Resources.

Marievale Complex

Ergo has submitted a renewal application to the DMRE for the prospecting rights it holds over 7L4 TSF, which is still being considered by the DMRE. EBM Projects, the landowner of the majority of the freehold under 7L4 TSF and the common law owner of the TSF has been placed into liquidation. Prior to liquidation a draft agreement was in progress for the sale of the TSF to Ergo where it would undertake to:
make a nominal payment;
assume all environmental liabilities for the facility;
suitably remove the TSF; and
rehabilitate the land.

Ergo is continuing the discussions with the administrators responsible for the EBM Projects liquidation and is expecting to have this concluded in due course.

Ergo acquired the Marievale TSFs 7L5, 7L6 and 7L7 – in terms of a written notarial executed deed of sale during 2019 and took possession of the TSFs on 8 April 2019. It has since also obtained the requisite National Environmental Management Act, 1998 regulatory approvals to retreat the said TSFs.

During the fiscal year 2023, the owner of the land on which 7L5, 7L6 and 7L7 are situated – an estimated 36.5Mt out of the total 54.1Mt comprising the Marievale cluster – notified Ergo that in its view, the said TSFs had acceded to the land, and that it had become the owner of the TSFs. Ergo disputed the claim of legal title and referred the matter to arbitration as all ownership requirements were met when the TSFs were purchased by Ergo Following the lodging of legal proceedings, the parties settled the dispute and Ergo entered into a commercial arrangement with the land-owner whereby the landowner has renounced its entire right, title and interest in and to the TSFs in the favour of Ergo against payment of an agreed sum. The 7L4, 7L5, 7L6 and 7L7 TSFs have been classified as Mineral Reserves in fiscal year 2022 and fiscal year 2023.

Below is a graphical representation of the permits and licenses held within the Group:

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item_4dxrightsa.jpg



Production

Ergo
    
    For fiscal year 2023, production decreased to 126,382 ounces from 133,618 ounces in fiscal year 2022 mainly due to the volume throughput that decreased from 22.1Mt to 17.3Mt as a result of increased load shedding, the depletion of high-volume reclamation sites and delays in commissioning new reclamation sites in fiscal year 2023. The impact of this decrease was offset by the increase in the average yield from 0.188g/t in fiscal year 2022 to 0.227g/t in fiscal year 2023.

    Cash operating costs decreased by $53 per ounce, or 4%, from $1,470 per ounce in fiscal year 2022 to $1,417 per ounce in fiscal year 2023 mainly due to the 17% weakening of the rand against the U.S. dollar which was offset by above inflationary increases in costs relating to reagents, diesel, electricity and security.



The following table details certain production and financial results of Ergo for the past three fiscal years.
202320222021
Production (imperial)
Ore milled ('000 tons)17,33422,11122,952
Recovered grade (oz/ton)0.0080.0060.006
Gold produced (ounces)126,382133,618137,059
Results of Operations
Revenue (R million)4,108.63,704.93,943.0
Cost of sales (R million)(3,320.2)(3,141.8)(2,871.0)
  Cash operating costs (R million)1
(3,183.2)(3,009.8)(2,666.5)
  Cash operating costs (R/kilogram)1
809,199718,676629,585
  All-in sustaining costs (R/kilogram) 1
895,741826,891704,503
  All-in cost (R/kilogram) 1
1,041,733848,683717,755
1 Cash operating cost, cash operating costs per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram are financial measures of performance that we use to determine cash generating capacities of the mines and to monitor performance of our mining operations. These are all non-IFRS measures. For a reconciliation of these measures to the nearest IFRS measure see Item 5A.: “Operating Results - Reconciliation of cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.”
FWGR
    
    For fiscal year 2023, production decreased to 43,435 ounces from 50,284 ounces produced in fiscal year 2022. The gold produced decreased due to decreased volume throughput from 6.1Mt in fiscal year 2022 to 5.7Mt in fiscal 2023 and a decrease in average yield from 0.257g/t in fiscal year 2022 to 0.237g/t in fiscal year 2023.

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    Cash operating costs increased by $49 per ounce, or 8%, from $596 per ounce in fiscal year 2022 to $645 per ounce in fiscal year 2023 mainly due to an above inflationary increases in costs relating to reagents, diesel, electricity and security and the lower gold production.

The following table details certain production and financial results of FWGR for the past three fiscal years.
202320222021
Production (imperial)
Ore milled ('000 tons)5,6986,0786,159
Recovered grade (oz/ton)0.0080.0080.008
Gold produced (ounces)43,43550,28446,940
Results of Operations
Revenue (R million)1,387.71,413.61,326.0
Cost of sales (R million)(589.8)(592.1)(517.2)
  Cash operating costs (R million)1
(504.9)(454.0)(406.2)
  Cash operating costs (R/kilogram)1
368,206291,302276,174
  All-in sustaining costs (R/kilogram) 1
545,780396,762377,210
  All-in cost (R/kilogram) 1
550,717422,540400,829
1 Cash operating cost, cash operating costs per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram are financial measures of performance that we use to determine cash generating capacities of the mines and to monitor performance of our mining operations. These are all non IFRS measures. For a reconciliation of these measures to the nearest IFRS measure see Item 5A.: “Operating Results - Reconciliation of cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.”
Licenses to OperateAll the licenses, permits, permissions, management plans and reports, as well as amendments, variations or modifications thereof from time to time necessary for Sibanye-Stillwater to operate the WRTRP Assets lawfully.
Access Rights
The grant of access to DRDGOLD of the:
·  Driefontein 10 shaft;
·  Kloof 10 shaft located in the Kloof mining area that is subject to the Kloof Mining Right, for the purpose of pumping and  supplying, at the cost of WRTRP, the required quantities of water, as licensed, for the WRTRP Assets;
·  rights, servitudes and agreements for installation, supply and distribution and maintenance of power supply; existing and proposed pipeline routes; servitudes; wayleaves and surface right permits; and
·  Driefontein 1 Gold Plant for the purpose of accessing the Pilot Plant.
Capital Expenditure

Ergo
    
    For a discussion of capital expenditures in fiscal years 2021, 2022 and 2023, see "Item 5.A. Operating and Financial Review and Prospects—Capital expenditure".    

    Capital expenditure related to material growth projects are financed on a project-by-project basis which may include bank facilities and existing cash resources. Sustaining capital expenditure is financed from cash generated from operations and existing cash resources. For a summary of capital expenditure, see Item 5A. Operating Results.

    Advance planning is underway for the implementation of the final life design of the Brakpan/Withok TSF to accommodate higher grade resources in the area east of the of the Ergo Plant and further extend the life of mine of Ergo.

    During fiscal year 2023 capital was expended to commence with the development and construction of a solar power project, to reduce Ergo’s reliance on the Eskom grid and reduce its carbon footprint. A large percentage of the planned capital expenditure in fiscal year 2023 will be applied to complete the first phase of the project. The first phase of the project is expected to be completed in 2024 and phase two in November 2025.

FWGR

    FWGR appointed an engineering consulting company to undertake the definitive feasibility study and detailed design for the Phase 2 project. The available information was independently reviewed by an external consultant, Sound Mining Solution (Pty) Ltd. The project initially included the construction of a new CPP with a capacity of between 1.2 Mtpm to 2.4 Mtpm and the equipping of the required reclamation sites and pipeline infrastructure to supply the relevant resources to the CPP. Phase 2 also includes the construction of a new RTSF capable of accepting up to 2.4 Mtpm to a capacity of approximately 800Mt. The definitive feasibility study was concluded in the fiscal 2021 year and is subject to obtaining regulatory approvals on the amended design of the RTSF. Management considered alternative plans should the RTSF be delayed further, based on information at hand. The Sibanye-Stillwater Leeudoorn tailings storage facility was evaluated as a viable interim alternative to the RTSF whilst regulatory approvals are obtained. Furthermore, the expansion of DP2 to a 1.2Mt processing capacity per month has been planned using the same designs applicable to CPP.
    
    Capital expenditure related to material growth projects are financed on a project-by-project basis which may include bank facilities and existing cash resources. Sustaining capital expenditure is financed from cash generated from operations and existing cash resources.

Mineral Reserves and Mineral Resources Estimation

Mineral Resources
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DRDGOLD's summary Mineral Resources (Exclusive of Mineral Reserves) are set forth in the tables below:
Mineral Resources (Exclusive of Mineral Reserves) as of June 30, 2023
Measured ResourcesIndicated ResourcesInferred ResourcesTotal
TonsGradeGold ContentTonsGradeGold ContentTonsGradeGold ContentTonsGradeGold Content
(mill)(g/tonne)('m ozs)(tonnes)(mill)(g/tonne)('m ozs)(tonnes)(mill)(g/tonne)('m ozs)(tonnes)(mill)(g/tonne)('m ozs)(tonnes)
Ergo66.040.260.5517.17375.410.253.0693.8521.320.240.165.12462.770.273.77116.14
FWGR 1
Total66.040.260.5517.17375.410.253.0693.8521.320.240.165.12462.770.273.77116.14
1 Mineral Resources when stated exclusive of Mineral Reserves amount to zero for FWGR, because all of the Mineral Resources will be exploited and converted to Mineral Reserves
Notes:
The figures contained in the tables are rounded, which may result in minor computational discrepancies which are not deemed to be significant.
Mineral Resources have been reported in accordance with the classification criteria of Subpart 1300 of Regulation S-K.
These Mineral Resources are stated inclusive of Mineral Reserves
In situ Mineral Resource estimate reported according to S-K 1300 requirements
No geological losses applied

Mineral Resources are estimates that contain inherent risk and uncertainties and depend upon geological interpretations and data statistics drawn from drilling and sampling programmes, which may prove to be unreliable. For detailed description of risks associated with the Company’s material properties, refer to Item 3D: Risk Factors.

Mineral Resources consist of sand dumps, slimes dams and silted ‘vlei’ areas and dams. Before dumps are included as Mineral Resources, they are evaluated by drilling and an initial assessment is completed by the Qualified Person.

With respect to the Mineral Resources and Mineral Reserves, drilling takes place on a predetermined grid to ascertain the average grade (grade model), moisture, expected extraction factors and ultimate financial viability before mining begins. Sampling is done subject to quality control and assurance as prescribed.

Estimation methods vary depending on data distribution and statistics. A block model is generated and used to evaluate the potential for inclusion into a mine plan. The applied Mineral Resource classification is a function of the confidence of the entire process from surveying, drilling, sampling, assaying, geological understanding and/or geostatistical relationships. Mineral Resources is reported in situ.

Both Mineral Resources and Mineral Reserves are determined by the average grade of a TSF which must be above or equal to a plant feed cut-off grade. A cut-off is also determined per complex or cluster. A TSF may report an average gold grade below a cut-off, but when included in a complex, the total complex could be above the cut-off. The assumptions on a Mineral Resource cut-off include working costs, the average plant recovery, the expected residue grade, the required yield based on working cost and gold price, and are presented below:

ERGOFWGR
Cut-off assumptions
Gold price (R)1 081 2611 081 261
Working cost (R/tonne)101.9997.08
Plant recovery (%)41.0053.00
Mine call factor (%)100100
Cut-off grade (g/t)0.230.17


The Mineral Resource estimates for all the TSFs and a sand dump are declared as follows:
The point of reference is in-situ. The TSFs or sand dumps themselves are the reference points;
No geological or other losses were applied as all material is accessible and there are no geological structures;
Mineral Resource Estimates are stated as both inclusive and exclusive of Mineral Reserves as defined in S-K 1300; and
Mineral Resources are 100% attributable to DRDGOLD.

Mineral Reserves

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DRDGOLD's summary Mineral Reserves are set forth in the tables below:
Mineral Reserves as of June 30, 2023
Proved ReservesProbable ReservesTotal Reserves
TonsGradeGold ContentTonsGradeGold ContentTonsGradeGold Content
(mill)(g/tonne)('m ozs)(tonnes)(mill)(g/tonne)('m ozs)(tonnes)(mill)(g/tonne)('m ozs)(tonnes)
Ergo185.290.311.8557.44196.170.251.6049.04381.460.283.45106.48
FWGR208.990.332.2068.5812.880.330.144.24221.870.332.3472.83
Total394.280.324.05126.02209.050.251.7453.28603.330.305.79179.30
Notes:
The figures contained in the tables are rounded, which may result in minor computational discrepancies which are not deemed to be significant.
The Mineral Reserves constitute the feed to the gold plants
The Mineral Reserves are stated at a price of ZAR1,081,261/kg
The input studies are to a PFS level of accuracy
No mining losses or dilution has been applied in the conversion process nor has a mine call factor been applied.
Tons and grade Run-of-Mine (RoM) as delivered to the plant
The Mineral Reserve estimates contained herein may be subject to legal, political, environmental or other risks that could materially affect the potential development of such Mineral Reserves
Key parameters used in the determination of Mineral Reserves June 30, 2023
RecoveryMine call factorOperating costsAverage cut-off grade
%%R/tg/t
Ergo41100 101.990.23
FWGR53100 97.080.17

The Mineral Reserves were prepared in accordance with the requirements of S-K 1300, and the economic viability thereof performed at a minimum prefeasibility study level. Modifying factors like dilution or mining losses bare not applied for the Mineral Reserve estimation because the TSFs are re-mined and re-processed in their entirety. All other modifying factors are reflected in the mine design and all of the associated technical aspects that informed the capital and operating cost estimates. Mineral Reserve is reported as delivered to the processing plants.

As material is removed for retreatment, the Mineral Resources and Mineral Reserves for each operation are adjusted accordingly. Continuous checks of modifying factors and ongoing surveys are conducted to monitor the rate of depletion and the accuracy of factors used in conversion.

Mineral Reserves changed in the past two fiscal years as follows:
Mineral Reserves decreased from 6.04 million ounces at June 30, 2022, to 5.79 (a decrease of 4.1%) million ounces at June 30, 2023, mainly because of depletion through ongoing mining activities.
Mineral Reserves increased from 5.35 million ounces at June 30, 2021, to 6.04 (an increase of 12.9%) million ounces at June 30, 2022, mainly because of Ergo’s Daggafontein TSF being reclassified to a Mineral Reserve which was in part offset through ongoing mining activities. This is despite the Grootvlei dumps being classified from a Mineral Reserve. Ergo also classified a number of its dumps from a Probable Mineral Reserve to a Proven Mineral Reserve, notably the Rooikraal TSF, 0.47Moz (56.76Mt @ 0.26g/t). Grootvlei Complex has been excluded from the life of mine and has been classified from a Mineral Reserve to a Mineral Resource due to land claims.

The life-of-mine for Ergo based on Proven and Probable Mineral Reserves S-K 1300 as at June 30, 2023, was 19 years (June 30, 2022: 19 years).

The life of mine for FWGR based on Proven and Probable Mineral Reserves under S-K 1300 as at June 30, 2023 was 18 years (June 30, 2022: 20 years).

The year on year Mineral Reserve reconciliation is shown below:

Tonnes (Mt)Grade Au (g/t)Au Ounces (Moz)
Mineral Reserves as at June 30, 2022
622.370.306.04
Depletion of Mineral Reserves – Ergo(15.05)0.33(0.16)
Survey adjustments - Ergo3.500.300.02
Depletion of Mineral Reserves – FWGR(7.51)0.48(0.11)
Mineral Reserves at June 30, 2023
603.310.305.79
The figures contained in the table are rounded, which may result in minor computational discrepancies which are not deemed to be significant. Depletion based on block model surveys
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Gold Price Assumptions

    The estimation of Mineral Reserves and Mineral Resources requires the economic assessment to demonstrate reasonable prospects for economic extraction. Assumptions in the economic assessment includes a gold price. The Company has estimated the gold price based on consensus forecasts obtained from various sources which provided a range as of June 30, 2023. The lowest range of these forecasts was selected to take into account the volatility experienced in the current global economic conditions.
Year ended June 30, 2023
Gold price
Rand gold price per kilogram1,081,261
Dollar gold price per ounce1,934
ZAR/USD rate17.39
Year ended June 30, 2022
Three-year average gold price
Rand gold price per kilogram914,294
Dollar gold price per ounce1,823
Ore Reserves (million ounces)15.60

Qualified Persons:

    The information contained in Item 4D related to Mineral Reserves and Mineral Resources is based on information compiled by the Qualified Persons as defined in S-K 1300. The Qualified Persons are not employed by the Company. The Company has evaluated the qualification and experience of the Qualified Persons and is satisfied that they meet the requirements in accordance with the SAMREC Code and S-K 1300. DRDGOLD obtained written consents from the Qualified Persons prior to publication of this report. The Qualified Person responsible for the compilation and reporting of Ergo’s Mineral Resources is Mr Mpfariseni Mudau and for FWGR is Ms Diana van Buren. The Qualified Person responsible for the compilation and reporting of Ergo’s Mineral Reserves is Professor Steven Rupprecht and for FWGR is Mr Vaughn Duke.

Qualified PersonsTitleAddressQualificationsRelevant years Experience
Mpfariseni Mudau
Pr.Sci.Nat. 400305/12
Director of The RVN Group Proprietary LimitedWillowbrook Villas 21, Van Hoof St, Roodepoort, 1724BSc (Hons) – Geology, MSc (Mining Engineering)17
Professor Steven Rupprecht
FSAIMM 701013
Associate Principal Mining Engineer of the RVN GroupWillowbrook Villas 21, Van Hoof St, Roodepoort, 1724BSc. Mining Engineering PhD. Mechanical Engineering36
Diana van Buren
Pr.Sci.Nat. 400107/14
Partner of Sound Mining Solution Proprietary LimitedSound Mining House, 2A Fifth Avenue, Rivonia, 2128BSc (Hons) – Geology17
Vaughn Duke
Pr. Eng 940314 FSAIMM 37179
Partner of Sound Mining Solution Proprietary LimitedSound Mining House, 2A Fifth Avenue, Rivonia, 2128BSc Mining Engineering (Hons), MBA38


Mineral Reserves and Mineral Resources internal control disclosure
    DRDGOLD has employed an independent consultant to manage drilling activities and report sampling results in accordance with DRDGOLD’s prescribed internal control procedures. The control procedures include standard operating procedure, supervision of drilling by experienced geologists, technical site visits by Qualified Persons, chain of custody and management approvals. Reputable commercial laboratories perform the assaying of samples for gold. These laboratories have quality assurance and quality control measures in place that satisfy Qualified Persons and also meet DRDGOLD’s requirements. The results are also submitted to the directors at Ergo and FWGR to ensure that due process has been followed and to identify any anomalies. Verification of estimates is a routine part of the plant feed sampling programme. Plant feed grades are compared to the expected grades from the Mineral Resource and Mineral Reserves and updated monthly. Surveys are undertaken monthly, and a reconciliation is reported annually. Any adjustments for shortfall or overruns are made in the Mineral Resource and Mineral Reserve statement for the following year. Gains or losses are largely related to volume adjustments on survey although adjustment may be made for other reasons such as unexpected deleterious materials in the dump. The estimation of Mineral Reserves is an outcome of life of mine and budget planning which runs annually, whereby capital costs, operating costs and other assumptions are interrogated and approved at an executive committee level.

Risks inherent in estimates
Uncertainties associated with the operations, and therefore the Mineral Resource and Mineral Reserve estimates, can be mitigated. The risks inherent in these estimates are:

34


Mining - whilst the mining method and practices are well established and conducted by experienced hydro-miners, throughput could be affected by a variety of issues, including, but not limited to availability of electricity and water.
Quality of the Mineral Assets - the Mineral Reserves have all been adequately drilled, their likely content adequately assessed and recovery test work satisfactorily completed. The actual recoveries will be influenced by the actual Run-on-Mine grade entering the processing plants. This risk could be managed by blending material from different TSFs’, where possible.
Plant Performance: the management of the risk of a lower-than-expected overall throughput recovery can be mitigated by ensuring optimal processing takes place at the processing plants.
Tailings Capacity: depending on when the construction of the new or expanded TSF's are completed, deposition rates can be impacted which impacts the volumes the operations can process. Should regulatory approvals further delay the construction of the RTSF and Brakpan/Withok final life design alternative depositions facilities needs to be explored.
Delayed Commissioning of Key Infrastructure: delays to the scheduled commissioning of key assets for Ergo and FWGR will impact on the proposed production forecast and anticipated revenues.
TSF Design Risk: the main design risk of the Brakpak/Withok final life design and the RTSF is the process of installing the synthetic liner. Should creases occur during installation, this could lead to a perforation in the liner, thus compromising the liners effectiveness.
Water Supply: South Africa is a relatively dry area and predictions are that dry conditions will escalate. Mining is heavily reliant on water to transport material over large distances and for processing.
Power Supply: power is provided by the national power supplier, Eskom. The national power supply and distribution infrastructure is severely destressed and this results in frequent disruptions to the power delivered to the South African mining industry. There is a curtailment agreement in place with Eskom which requires that during black-outs electricity use is to be curtailed, which is typically achieved by shutting down equipment. The curtailment reduces consumption between 10 and 20%.
Grave Relocation: the process of grave relocation is well understood in the South African mining industry and supported by comprehensive statutory guidelines. It will be managed by specialists who will ensure that full consultation with next of kin is undertaken and that appropriate compensation is realized.
Long-term Sustainability: Continued production beyond the current LoM plan and Mineral Reserve estimate relies on available TSFs that can be brought on line in the future. There is ample time for additional sampling and resource modelling to confirm their extent and content prior to production.
Climate Change: extreme weather events such as droughts, extreme rainfall and high wind volumes are on the increase. Specifically, the increase in intensity of events, such as thunderstorms on the Highveld, where the operations are situated, will impact operations. Major property, infrastructure and/or environmental damage as well as loss of human life could also be caused by extreme weather events.
Rising Costs: The global economic environment, geopolitical tensions and inflationary pressures world-wide have led to above inflationary increases in production costs as well as an unavailability of critical material such as reagents and critical equipment which effects production and operating costs.
Country Risk and Security: increasing inflation, corruption and poor service delivery are the primary drivers of social pressures, particularly in poorer communities. The consequences of these pressures are mostly seen in operational disruptions and increased security measures due to protest action and more crime. Protest action also results in the damage to existing infrastructure.
Gold Price: Ergo and FWGR takes full exposure to the gold price, and therefore a reduction in the price of gold may erode margins or lead to the operations making a loss.

For additional information regarding the Company’s risks, see Item 3D - RISK FACTORS.
35



ITEM 4A. UNRESOLVED STAFF COMMENTS

None.
    
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

This section should be read in conjunction with, our audited financial statements and the other financial information contained elsewhere in this Annual Report. Our financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Our discussion contains forward looking information based on current expectations that involve risks and uncertainties, such as our plans, objectives and intentions. Our actual results may differ from those indicated in such forward looking statements.

Comparison of financial performance for the fiscal year ended June 30, 2022 with fiscal year ended June 30, 2021

This comparison analysis can be found in Item 5A of the Company’s annual report on Form 20-F for the fiscal year ended June 30, 2022 filed with the United States Securities and Exchange Commission on October 28, 2022 (SEC File no. 001-35387).


5A. OPERATING RESULTS

Business overview

We are a South African gold mining company engaged in surface gold tailings retreatment, including exploration, extraction, processing and smelting. All our surface tailings retreatment operations, including the requisite infrastructure and metallurgical processing plants, are located in South Africa.

The success of DRDGOLD’s long-term goal to extract as much gold from its assets as possible and as economically viable depends, to a large extent, on how effectively it continues to manage its resources.

DRDGOLD’s strategic thinking is informed by principles of sustainable development. Our goal is to optimally exploit our entire resource over the long term, thereby seeking sustainable benefits in respect to the following capitals, each of which is essential to our operation – financial, manufactured, natural, human and social capital.

We also aim to align and overlap the interests of each of these capitals in such a manner that an investment in any one translates into value-add in as many of the others as possible. We therefore seek to achieve an enduring and harmonious alignment between them, and we pursue these criteria in the feasibility analysis of each investment.

    Our profit for fiscal year 2023 increased compared to fiscal year 2022, mainly due to, inter alia, the following:
the average rand gold price received increased by 16%; and
the average yield increased by 13% to 0.229g/t, offset by an 18% decrease in throughput to 23,031,861t.
        
Key drivers of our operating results and principal factors affecting our operating results

the price of gold, which fluctuates both in terms of dollars and rands;
our production tonnages and gold content thereof, impacting on the amount of gold we produce at our operations;
our cost of producing gold, including the effects of mining efficiencies;
general economic factors, such as exchange rate fluctuations and inflation, and factors affecting mining operations in South Africa; and
government policies that could materially impact our operations.

Gold price

Our revenues are derived primarily from the sale of gold produced at our surface tailings retreatment operations. As a result, our operating results are directly related to the price of gold, which can fluctuate widely and is affected by numerous factors beyond our control, including industrial and jewelry demand, expectations with respect to the rate of inflation, the strength of the U.S. dollar (the currency in which the price of gold is generally quoted) and of other currencies, interest rates, actual or expected gold sales by central banks, forward sales by producers, global or regional political or economic events, and production and cost levels in major gold-producing regions such as South Africa. In addition, the price of gold is often subject to rapid short-term changes because of speculative activities. In response to the high world wide inflation , investors globally, as they have in so many previous times of crisis, turned to gold and gold stocks as a safe haven asset, leading to a sustained high average gold price during fiscal year 2023 as result of global economic uncertainty along with the slow economic recovery and consequences of the Ukraine conflict since fiscal year 2022.

The demand for and supply of gold affects gold prices, but not necessarily in the same manner that supply and demand affect the prices of other commodities. The supply of gold consists of a combination of new production from mining and existing stocks of bullion and fabricated gold held by governments, public and private financial institutions, industrial organizations and private individuals.

The following table indicates data relating to the dollar gold spot prices for the 2023 and 2022 fiscal years:

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2023 fiscal year
2022 fiscal year
Change
$ per ounce$ per ounce%
Closing gold spot price on June 30,
1,9201,8076
Lowest gold spot price during the fiscal year1,6141,684(4)
Highest gold spot price during the fiscal year2,0722,070
Average gold spot price for the fiscal year1,8311,834— 
All our operations and gold production are based in South Africa, and as a result, the impact of movements in relevant exchange rates is significant to our operating results. The average gold price in rand (based on average spot prices for the year) decreased by 2% from R28,490 per ounce in 2021 to R27,896 per ounce in 2022, and increased by 18% to R32,519 per ounce in 2023.

An increase/(decrease) of 20% in the US dollar gold price throughout fiscal year 2023 would have increased/(decreased) revenue by approximately R1,099.3 million (2022: R1,023.7 million).
    
An increase/(decrease) of 20% in the rand to US dollar exchange rate throughout fiscal year 2023 would have increased/(decreased) revenue by approximately R1,099.3 million (2022: R1,023.7 million).

Gold production
    In fiscal year 2023, gold production decreased to 169,820 ounces (produced from 23.0 million tonnes milled at an average yield of 0.229g/t) from 183,902 ounces in fiscal year 2022 (produced from 28.2 million tonnes milled at an average yield of 0.203g/t). This was mainly due to Ergo’s gold production which decreased to 126,382 ounces in fiscal year 2023 (produced from 17.3 million tonnes milled at an average yield of 0.227g/t) from 133,618 ounces in fiscal year 2022 (produced from 22.1 million tonnes milled at an average yield of 0.188g/t). The decrease at Ergo was a result of a decrease in tonnes milled due to the depletion of high-volume reclamation sites and delays in obtaining regulatory approval to commence reclamation at major reclamation sites. In addition, FWGR also had decreased production at 43,435 ounces in fiscal year 2023 (produced from 5.7 million tonnes milled at an average yield of 0.237g/t) from 50,284 ounces in fiscal year 2022 (produced from 6.1 million tonnes milled at an average yield of 0.257g/t). Both tonnes and grade were lower due to Driefontein 5 reaching the end of its life and entering final clean up along with operational delays in commissioning of the new reclamation site, Driefontein 3.

In fiscal year 2022, gold production decreased to 183,902 ounces (produced from 28.2 million tonnes milled at an average yield of 0.203g/t) from 183,999 ounces in fiscal year 2021 (produced from 29.1 million tonnes milled at an average yield of 0.197g/t). This was mainly due to Ergo's gold production which decreased to 133,618 ounces in fiscal year 2022 (produced from 22.1 million tonnes milled at an average yield of 0.188g/t) from 137,059 ounces in fiscal year 2021 (produced from 23.0 million tonnes milled at an average yield of 0.186g/t). The decrease was a result of a decrease in tonnes milled due to increased rainfall as well as lower grade material being mined.

Cash operating costs

    Cash operating costs is a non-IFRS financial measure of performance that is reported to the group’s chief operating decision maker (CODM) and is used to monitor performance – refer to Item 18. ‘‘Financial Statements - Note 23 – Operating segments”. For a reconciliation of this measure see Item 5A.: “Reconciliation of cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram”.

    Cash operating costs include consumables, labor, specialized service providers, electricity and other related costs incurred in the production of gold. Consumables, water and electricity, labor, specialized service providers and other costs are the largest components of cash operating costs. A breakdown of cash operating costs into these costs is described in Item 5A.: “Comparison of financial performance for the fiscal year ended June 30, 2023 with fiscal year ended June 30, 2022”.

General economic factors
We are exposed to a number of factors, which could affect our profitability, such as exchange rate fluctuations, inflation and other risks relating to South Africa. In conducting mining operations, we are subject to the inherent risks and uncertainties of the industry, and the wasting nature of the assets.

Effect of exchange rate fluctuations

For the fiscal years 2023 and 2022, all of our revenues were generated from South African operations, all of our operating costs were denominated in rand and we derived all of our revenues in dollars before being translated to rands. As the price of gold is denominated in dollars which is then translated into rands, the appreciation of the dollar against the rand increases our profitability, whereas the depreciation of the dollar against the rand reduces our profitability.

In fiscal year 2023 the average rand gold price received increased by 16% compared to fiscal year 2022, this was a result of the combined impact of the average Dollar gold price which decreased by 0.3% and the average exchange rate of the rand against the dollar that weakened by 17%.

In line with our long-term strategy of being an unhedged gold producer, we generally do not enter into forward gold sales contracts to reduce our exposure to market fluctuations in the Dollar gold price or the exchange rate movements. If revenue from gold sales falls for a substantial period below our cost of production at our operations, we could determine that it is not economically feasible to continue commercial production at any or all of our plants or to continue the development of some or all of our projects. However, during periods when medium-term debt is incurred to fund growth projects and hence introduce liquidity risk to the Group, we may mitigate this liquidity risk by entering into hedging instruments to achieve price protection (refer Item 11. Quantitative and Qualitative Disclosures About Market Risk – General).

Effect of inflation and exchange rates

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In the past, our operations have been materially adversely affected by inflation. If there is a significant increase in inflation in South Africa, our costs will increase and if such a cost increase is not offset by an increase in the rand price of gold, this will negatively affect our operating results.

The movements in the rand/dollar exchange rate, based upon average rates during the periods presented, and the local annual inflation rate for the periods presented, as measured by the South African Consumer Price Index, or CPI, are set out in the table below:
Fiscal year ended
Year ended June 30,
202320222021
(%)(%)(%)
The average rand/dollar exchange rate weakened/(strengthened) by:
17 (1)(2)
CPI (inflation rate)5.47.44.9
Government policies that could materially impact operations

    The mining industry in South Africa is extensively regulated through legislation and regulations issued by government’s administrative bodies. One of the key findings of the Frasers Institute weighing on South Africa’s investment appeal, is lack of regulatory certainty. Although the industry’s successfully challenge of Mining Charter III in the High Court, that set aside certain provisions of the charter on the basis that it was purported legislation (as opposed to policy) provided some certainty to the industry, turnaround in obtaining permits and regulatory approvals remains slow, delaying the execution of key capital projects. The increasing prominence of ESG is also resetting the standard on transparency and sustainability and society generally is far more environmentally and socially aware, applying increasing pressure through providers of capital and the regulator to enforce compliance. For a more detailed discussion of government policies that may impact our operations, please refer to Item 4B: "Governmental regulations and their effects on our business."

Key financial and operating indicators

The table below presents the key performance measurement data for the past two fiscal years: The financial results for the fiscal years below are stated in accordance with IFRS as issued by the IASB. The table includes the key performance measures for our business and its profitability, which are revenue, gold production, gold prices, operating costs, cash operating costs per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram, capital expenditure (additions to property, plant and equipment) and Ore Reserves.

Financial and operating data
Year ended June 30,
20232022
Revenue (R'm)5,496.35,118.5
Gold production (ounces)169,820183,902
Gold production (kilograms)5,2825,720
Gold sold (ounces)169,531183,709
Gold sold (kilograms)5,2735,714
Average spot gold price (R/kilogram)1,045,472896,877
Average gold price received (R/kilogram)1,041,102894,409
Cost of sales (R'm)3,911.03,741.5
Operating costs (R'm)3,711.43,506.5
Cash operating costs (R'm) (1)
3,688.13,463.8
Cash operating costs (R/kilogram) (1)
697,382600,875
All-in sustaining costs (R/kilogram) (1)
827,148721,684
All-in costs (R/kilogram) (1)
937,525746,255
Additions to property, plant and equipment (R'm)1,030.9598.4
(1) Cash operating costs, cash operating costs per kilogram, all-in sustaining costs, all-in sustaining costs per kilogram and all-in costs and all-in costs per kilogram are non-IFRS financial measures of performance that we use to monitor performance. A reconciliation of these measures to the nearest IFRS measure is included in Item 5A.: “Operating Results - Reconciliation of cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.”

Revenue

Revenue increased by 7% to R5,496.3 million in fiscal year 2023 from R5,118.5 million in fiscal year 2022 mainly due to the average rand gold price received that increased by 16% to R1,041,102 per kilogram offset by the 441kg decrease in gold sold from 5,714 kilograms in fiscal 2022 to 5,273 kilograms in fiscal 2023.

    Refer to Item 5A:. “Operating results: Key drivers of our operating results and principal factors affecting our operating results” for a discussion regarding the gold price received and sales volumes.


Capital expenditure

During fiscal year 2023 capital expenditure increased by R432.5 million to R1,030.9 million from R598.4 million in fiscal year 2022.

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Ergo’s capital expenditure during fiscal year 2023 increased by R391.8 million to R816.0 million from R424.2 million in fiscal year 2022. This was mainly due to construction of the solar plant amounting to R502.0 million , further development of R139.3 million for the development of reclamation sites including Marievale and Rooikraal dumps and various capital expenditure on the Brakpan/Withok TSF amounting to R45.4 million.

FWGR’s capital expenditure during fiscal year 2023 increased by R50.0 million to R209.8 million from R159.8 million in fiscal year 2022. This was mainly due to the development of the Driefontein 3 reclamation site amounting to R142.9, design work for the RTSF amounting to R7.8 million and capital expenditure on the Driefontein 4 Tailings Storage Facility amounting to R3.5 million.

During fiscal year 2022, capital expenditure was R598.4 million primarily consisting of expenditure incurred on sustaining capital expenditure on the existing and new reclamation sites, the Brakpan/Withok TSF, the Brakpan plant, the construction for the additional thickener and the design work for CPP which was also applicable to the potential expansion of DP2.

Critical accounting policies

    The preparation of the consolidated financial statements requires management to make accounting assumptions, estimates and judgements that affect the application of the Group's accounting policies and reported amounts of assets and liabilities, income and expenses. By their nature, judgements are subject to an inherent degree of uncertainty. Accounting assumptions, estimates and judgements are reviewed on an ongoing basis. Revisions to reported amounts are recognized in the period in which the revision is made and in any future periods affected. Actual results may differ from these estimates.

Management has discussed the development and selection of each of these critical accounting policies with the Board of Directors and the Audit Committee, both of which have approved and reviewed the disclosure of these policies. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in Item 18. “Financial Statements”.

Critical accounting policies that require significant judgment

    Management believes the following critical accounting policies require more significant judgements to be used in the preparation of our consolidated financial statements and could potentially impact our financial results and future financial performance:
Payments made under protest: Judgement regarding the outcome of the matter, and
Contingencies: Judgement regarding the outcome of the respective matters

Payments made under protest

    The assessment to develop and apply the relevant accounting policy for payments made under protest that arise from the Municipality Electricity Tariff Dispute (refer Item 18. ‘‘Financial Statements - Note 24 Payments made under protest”) requires the exercise of significant judgement.

    The judicial proceedings that impact the Payments made under protest are inherently complex legal issues that are subject to uncertainties and complexities and are subject to interpretation.

Contingencies

    The assessment of the impact of contingent liabilities requires the exercise of significant judgement regarding the outcome of uncertain future events. Litigation and other judicial proceedings inherently entail complex legal issues that are subject to uncertainties and complexities and are subject to interpretation.

Critical accounting policies that require significant assumptions and estimates

    Management believes the following are critical accounting policies which involve the more significant assumptions and estimates used in the preparation of our consolidated financial statements, and are therefore considered DRDGOLD’s critical accounting estimates which could potentially impact our financial results and future financial performance:
Depreciation: Estimation of the life-of-mine
Provision for environmental rehabilitation: Estimation of future environmental rehabilitation costs
Income tax: Estimation of the deferred tax rate
Payments made under protest: Estimation of the carrying value and recoverability
Other investments:    Estimation of the fair value of financial assets

Depreciation: Estimation of life-of-mine

    Depreciation of mine plant facilities and equipment, as well as mining property and development (including mineral rights) are calculated using the units of production method which is based on the life-of-mine of each site. The life-of-mine is primarily based on proved and probable mineral reserves. It reflects the estimated quantities of economically recoverable gold that can be recovered from reclamation sites based on the estimated gold price. Changes in the life-of-mine will impact depreciation on a prospective basis. The life-of-mine is prepared using a methodology that takes account of current information to assess the economically recoverable gold from specific reclamation sites and includes the consideration of historical experience.

Provision for environmental rehabilitation: Estimation of future environmental rehabilitation costs

    Provisions for environmental rehabilitation are provided at the present value of the costs expected to be incurred in the future to settle the obligation based on current prices. The unwinding of the obligation is included in profit or loss. Estimated future costs of environmental rehabilitation are reviewed regularly and adjusted as appropriate. Changes in estimates are capitalized or reversed against the related asset but taken to profit or loss if there is no related asset left. Gains or losses from the expected disposal of assets are not taken into account when determining the provision.

    Estimates of future environmental rehabilitation costs are based on the Group’s environmental management plans which are developed in accordance with regulatory requirements, the life-of-mine plan and the planned method of rehabilitation which is influenced by developments in trends and technology.
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Income tax: Estimation of the deferred tax rate

    Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The deferred tax liability is calculated by applying a forecast weighted average tax rate that is based on a prescribed formula. The calculation of the forecast weighted average tax rate requires the use of assumptions and estimates and are inherently uncertain and could change materially over time. These assumptions and estimates include the expected future profitability and timing of the reversal of the temporary differences. Due to the forecast weighted average tax rate being based on a prescribed formula that increases the effective tax rate with an increase in forecast future profitability, and vice versa, the tax rate can vary significantly year on year and can move contrary to current period financial performance.

Payments made under protest: Estimation of the carrying value and recoverability

    The discounted amount of the Payments made under protest is determined using assumptions about the future that are inherently uncertain and can change materially over time and includes the discount rate and discount period.

    These assumptions about the future include estimating the timing of concluding on the main application, i.e. the discount period, the ultimate settlement terms (refer Item 18. ‘‘Financial Statements - Note 24 Payments made under protest”), the discount rate applied and the assessment of recoverability.

    Recognition and measurement

    The asset that arises from the Ekurhuleni electricity dispute (refer Item 18. ‘‘Financial Statements - Note 24 Payments made under protest”) and that are payments made under protest is initially measured at a discounted amount and any difference between the face value of payments made under protest and the discounted amount on initial recognition is recognised in profit or loss as a finance expense. Subsequent to initial recognition, the Payments made under protest is measured using the effective interest method to unwind the discounted amount to the original face value less any write downs for recovery. Unwinding of the carrying value and changes in the discount period are recognised in the statement of profit or loss.

    Assessment of recoverability

    The discounted amount of the payments under protest is assessed at each reporting date to determine whether there is any objective evidence that the full amount is no longer expected to be recovered. The Group considers the reasonable and supportable information related to the creditworthiness of Ekurhuleni Metropolitan Municipality and events surrounding the outcome of the Main Application (refer Item 18. ‘‘Financial Statements - Note 24 Payments made under protest”). Any write down is recognised in the statement of profit or loss.

    Other investments: Estimation of the fair value of financial assets

    The fair value of other investments is determined using assumptions about the future that are inherently uncertain and can change materially over time. It includes several assumptions that are based on both observable and unobservable inputs. Assumptions applied in the estimation of the fair value of the investment in Rand Refinery include the following:

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Amounts in R millionObservable/unobservable inputUnit20232022
Rand Refinery operations
Forecast average gold priceObservable inputR/kg1,060,562880,207
Forecast average silver priceObservable inputR/kg13,46011,209
Average South African CPIObservable input%4.5 4.4 
South African long-term government bond rateObservable input%10.5 10.3 
Terminal growth rateUnobservable input%4.5 4.4 
Weighted average cost of capitalUnobservable input%17.0 15.9 
Investment in Prestige Bullion
Discount periodUnobservable inputyears1011
Cost of equityUnobservable input%17.014.2 
    Marketability and minority discounts (both unobservable inputs) were also applied of 15.3% and 17.0% (2022: 16.5% and 17.0%) respectively. The latest budgeted cash flow forecasts provided by Rand Refinery as at June 30, 2023 was used, and therefore classified as an unobservable input into the models.

New standards, amendments to standards and interpretations

    Refer to Item 18. ‘‘Financial Statements - Note 3 – New standards, amendments to standards and interpretations” for a discussion of relevant standards, amendments to standards and interpretations that may be applicable to the business of the Group and may have an impact on future consolidated financial statements.

Comparison of financial performance for the fiscal year ended June 30, 2023 with fiscal year ended June 30, 2022

Gold revenue

The following table illustrates the year-on-year change in gold revenue for fiscal year 2023 in comparison to fiscal year 2022:

R millionTotalImpact of change in amount of gold soldImpact of change in gold priceNet changeTotal
gold revenuegold revenue
20222023
Ergo3,700.1(181.5)585.9404.44,104.5
FWGR1,410.6(213.1)187.7(25.4)1,385.2
Consolidated5,110.7(394.6)773.6379.05,489.7

Gold revenue increased by R379.0 million, or 7%, to R5,489.7 million during fiscal year 2023. This was mainly due to the average rand gold price received which increased by 16% to R1,041,102 per kilogram offset by a decrease in gold sold from 183,709 ounces to 169,531 ounces.

Cost of sales

    Cost of sales amounted to R3,911.0 million in fiscal year 2023, consisting mainly of operating costs of R3,711.4 million, depreciation of R217.5 million, a positive movement in gold in process of R10.8 million and a positive movement in the change in estimate of environmental rehabilitation of R7.1 million. These are discussed as follows:

Operating costs

    Operating costs increased by 6% to R3,711.4 million for fiscal year 2023 compared to R3,506.5 million for fiscal year 2022. The increase is mainly due to above inflationary increases in mainly the cost of cyanide, steel and steel-related products, electricity and fuel. There was also a significant increase in machine hire costs due to mechanical reclamation to reclaim material from the major clean up sites.

Depreciation

Depreciation charges were R217.5 million for fiscal year 2023 compared to R267.6 million for fiscal year 2022. Depreciation charges decreased as a result of an 18% decrease in tonnes milled and an increase in the life of mine of Ergo. This is despite an increase in capital expenditure during the year as a significant portion of capital expenditure was for assets not brought into use during fiscal year 2023.

Change in estimate of environmental rehabilitation

As of June 30, 2023, we estimate our total environmental rehabilitation provision, being the discounted estimate of future costs, to be R562.1 million as compared to R517.7 million at June 30, 2022. A change in estimate of environmental rehabilitation of R7.1 million was recognized due to changes in the estimated timing of the vegetation of non-viable reclamation sites and dormant infrastructure. In addition, a R20.4 million increase in the provision due to above inflationary increases on machine hire rates.

A total of R630.6 million (2022: R589.8 million) is invested in funds held in insurance instruments to secure financial guarantees provided to the DMRE through an insurance cell captive company, the Guardrisk Cell Captive. The increase is attributable to growth of R40.7 million on these funds during fiscal year 2023. As at June 30, 2023, guarantees amounting to R951.8 million were in issue to the DMRE (2022: R614.0 million). Any shortfall between the invested funds and the estimated provisions is expected to be financed by
41


contributions to the Guardrisk Cell Captive from time to time as required over the remaining production life of the respective mining operations and, at the time of mine closure, the proceeds on the disposal of remaining assets and gold from plant clean-up. The transfer of the funds, during fiscal year 2022, from the environmental trust fund to the Guardrisk Cell Captive was completed after the required approvals for the change in method and transfer of the environmental trust funds were obtained from the DMRE and a thorough consideration of tax and legal impacts was performed.

Movements in gold in process

Movement in gold in process in fiscal year 2023 amounted to R10.8 million mainly due to an increase in the lock up of gold in process at the plants and finished inventories - Gold Bullion.

Administration expenses and general costs

Administration expenses and general costs increased by R11.7 million from R161.2 million in fiscal year 2022 to R172.9 million in fiscal year 2023, mainly as a result of inflation, and an increase in the short term incentive payments. The increases were offset by decreases in transaction and exploration costs from R15.2 million in fiscal year 2022 to R4.6 million in fiscal year 2023.

Finance income

Finance income increased from R225.8 million in fiscal year 2022 to R334.3 million in fiscal year 2023, mainly due to an increase in interest income earned of R78.3 from higher cash and cash equivalents balances maintained during the year and higher interest rates.

Finance expense

Finance expenses decreased from R74.8 million in fiscal year 2022 to R70.7 million in fiscal year 2023, mainly attributable to discount on the initial payment made under protest of R19.0 million compared to R21.1 million in fiscal year 2022.

Income tax

Income tax amounted to a charge of R405.0 million for fiscal year 2023 (2022: charge of R334.3 million) and consists of a current tax charge of R286.3 million (2022: charge of R261.6 million) and a deferred tax charge of R118.7 million (2022: deferred tax charge of R72.7 million).

The current tax increased to R286.3 million in fiscal year 2023 from R261.6 million in fiscal year 2022 mostly due to an increase in the taxable mining income of both Ergo and FWGR resulting mainly from an increase in profits due to the high rand gold price. This was in part offset by increased capital expenditure for which full capital redemption under section 36 of the Income Tax Act was applied.

The forecast weighted average deferred tax rate for both Ergo and FWGR remained unchanged in fiscal year 2023 at 22% and 29%. Refer to Item 10E.: Taxation – “Income Tax and Withholding Tax on Dividends” for a detailed explanation on changes in taxation laws and regulations.

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Non-IFRS Measures

Set forth below is a discussion of non-IFRS measures presented in this report, including a reconciliation of such measures from the nearest measure under IFRS, as well as an explanation as to why we believe that presentation of such information provides useful information to investors and additional purposes, if any, for which we use such measures.

Adjusted earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”)

Set forth below is a presentation of our Adjusted EBITDA, which is a non-IFRS measure, including the items included in this measure and a reconciliation from profit for the year. Our calculation of Adjusted EBITDA is based on the calculation of this measure as included in our RCF agreement which was not renewed in September 2022 when it expired. The Group still considers the presentation of Adjusted EBITDA as relevant to our investors as our holding company, Sibanye-Stillwater, who consolidates our results, discloses a similar non-IFRS measure to its investors. Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is not a measure of performance under IFRS and should be considered in addition to, and not as a substitute for, other measures of financial performance and liquidity.
Year ended, June 30
Reconciliation of adjusted EBITDA20232022
Profit for the year1,281.41,123.8
Income tax405.0334.3
Profit before tax1,686.41,458.1
Finance expense70.774.8
Finance income(334.3)(225.8)
Results from operating activities1,422.81,307.1
Depreciation217.5267.6
Share based payment expense
22.018.4
Change in estimate of environmental rehabilitation recognised in profit or loss(7.1)(2.2)
Gain on disposal of property, plant and equipment(10.3)(6.6)
IFRS 16 Lease payments
(16.9)(23.8)
Exploration expenses and transaction costs4.615.2
Adjusted earnings before interest, tax depreciation and amortisation ("Adjusted EBITDA") 1
1,632.61,575.7
1 See Glossary of Terms for definitions.
Cash operating costs, cash operating costs per kilogram, sustaining capital expenditure, all-in sustaining costs, growth capital expenditure and all-in costs per kilogram

Cash operating costs, cash operating costs per kilogram, sustaining capital expenditure, all-in sustaining costs, growth capital expenditure and all-in costs per kilogram are non-IFRS financial measures that should not be considered by investors in isolation or as alternatives to cost of sales, net profit/(loss) attributable to equity owners of the parent, profit/(loss) before tax and other items or any other measure of financial performance presented in accordance with IFRS or as an indicator of our performance. While the World Gold Council has provided guidance for the calculation of cash operating costs, cash operating costs per kilogram, all-in sustaining costs and all-in costs per kilogram as well as classification of capital expenditure between sustaining capital expenditure and growth capital expenditure, such measurements may vary significantly among gold mining companies, and these definitions by themselves do not necessarily provide a basis for comparison with other gold mining companies. However, we believe that these measures are useful indicators to investors and our management of an individual mine's performance and of the performance of our operations as a whole as they provide:
an indication of a mine’s profitability and efficiency;
the trend in costs;
a measure of margin per kilogram, by comparison of the cash operating costs per kilogram to the price of gold; and
a benchmark of performance to allow for comparison against other mines and mining companies.
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For fiscal year 2023, consolidated cash operating costs per kilogram increased by 16% to R697,382 per kilogram from R600,875 per kilogram in fiscal year 2022. Consolidated all-in sustaining costs per kilogram increased by 15% to R827,148 per kilogram in fiscal year 2023 from R721,684 per kilogram in fiscal year 2022. Consolidated all-in costs per kilogram increased by 26% to R937,525 per kilogram of gold in fiscal 2023 from R746,255 per kilogram of gold in fiscal year 2022.

The increase in consolidated cash operating costs per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram was mainly due to an increased in cash operating costs, which is due to above inflationary increases mainly in the cost of cyanide, steel and steel-related products, electricity and fuel. There was also a significant increase in machine hire costs due to mechanical reclamation to reclaim material from the major clean up sites. Furthermore, the reduction in gold produced also contributed to the increases.
The increase in cash operating cost during fiscal year 2023 contributed to the increase in all-in sustaining costs per kilogram. The increase in growth capital expenditure incurred during fiscal year 2023 similarly contributed to the increase in all-in costs per kilogram.

Reconciliation of cash operating costs, cash operating costs per kilogram, all-in sustaining costs, all-in sustaining costs per kilogram, all-in costs and all-in costs per kilogram
R millions20232022
Cost of sales
3,911.03,741.5
Depreciation(217.5)(267.6)
Change in estimate of environmental rehabilitation7.12.2
Movement in gold in process10.830.4
Operating costs3,711.43,506.5
Ongoing rehabilitation expenditure(26.8)(31.6)
Care and maintenance costs(0.4)(5.9)
Other operating income/(costs)3.9(5.2)
Cash operating costs 1
3,688.13,463.8
Movement in gold in process(10.8)(30.4)
Administration expenses and other costs excluding non-recurring items 1
172.2146.0
Other operating income/(costs)(3.4)5.1
Change in estimate of environmental rehabilitation(7.1)(2.2)
Unwinding of rehabilitation provision46.245.0
Sustaining capital expenditure 1
476.3496.4
All-in sustaining costs 1
4,361.54,123.7
Care and maintenance costs0.45.9
Ongoing rehabilitation expenditure26.831.6
Exploration expenses and transaction costs0.215.2
Growth capital expenditure 1
554.687.7
All-in costs 1
4,943.54,264.1
Gold produced (kilograms)5,2825,720
Cash operating costs per kilogram (R per kilogram)697,382600,875
All-in sustaining costs per kilogram (R per kilogram)827,148721,684
All-in costs per kilogram (R per kilogram)937,525746,255
Reconciliation of sustaining capital expenditure and growth capital expenditure
Additions - property, plant and equipment owned1,030.9584.1
Less
Growth capital expenditure 1
554.687.7
Sustaining capital expenditure 1
476.3496.4
1See Glossary of Terms for definitions.
44


Cash operating costs

    Cash operating costs are linked directly to the level of throughput of a specific fiscal year.

    The following table illustrates the year-on-year change in cash operating costs for fiscal year 2023 in comparison with fiscal year 2022.

R millionCash operating costsImpact of change in throughputImpact of change in costsNet changeCash operating costs
20222023
Ergo3,009.8(650.3)823.7173.43,183.2
FWGR454.0(28.4)79.250.9504.9
Total3,463.8(678.7)902.9224.33,688.1

    Cash operating costs in fiscal year 2023 increased by R224.3 million to R3,688.1 million compared to cash operating costs of R3,463.8 million in fiscal year 2022.The increase is due to above inflationary increases mainly in the cost of cyanide, steel and steel-related products, electricity and fuel. There was also a significant increase in machine hire costs due to mechanical reclamation to reclaim material from the major clean up sites.

    The following table lists the major components of cash operating costs for the Group for each operation and fiscal year set forth below respectively:

ErgoFWGR
Years endedYear ended
Costs20232022Costs20232022
Consumables32 %29 %Consumables35 %32 %
Labor18 %18 %Labor20 %21 %
Electricity and water17 %18 %Specialized service providers16 %%
Specialized service providers19 %16 %Electricity and water%19 %
Machine hire%%Machine hire%%
Security expenses%%Security expenses%%
Other costs%11 %Other costs14 %12 %
5B. LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities

    Cash generated from operating activities amounted to R1,655.6 million for fiscal year 2023 (fiscal year 2022: R1,497.8 million).

    Cash generated from operating activities increased during fiscal year 2023 mostly due to a 16% increase in the average rand gold price received to R1,041,102 per kilogram and offset by a 16% increase in cash operating costs to 697,382 per kilogram. Net movement in working capital (changes in trade and other receivables, consumable stores and stockpiles and trade and other payables) amounted to a cash inflow of R44.1 million in fiscal year 2023.

    The increase in cash inflows was partially offset by a R52.1 million increase in current tax paid to R314.8 million.

Cash flows from investing activities

Net cash utilized by investing activities amounted to R1,186.5 million in fiscal year 2023 compared to R626.2 million in fiscal year 2022.

In fiscal year 2023, net cash utilized by investing activities consisted mainly of R1,145.2 million in additions to property, plant and equipment, R28.4 million investment in other funds and R13.8 million spent on environmental rehabilitation payments. These outflows were reduced by R0.9 million proceeds on the disposal of property, plant and equipment.

In fiscal year 2022, net cash utilized by investing activities consisted mainly of R584.1 million in additions to property, plant and
equipment, R28.9 million investment in other funds and R25.4 million spent on environmental rehabilitation payments. These outflows were reduced by R12.2 million proceeds on the disposal of property, plant and equipment.

Cash flows from financing activities

Net cash outflow from financing activities was R532.2 million in fiscal year 2023 compared to net cash outflows of R533.0 million in fiscal year 2022.

During fiscal year 2023, the net cash outflow consisted mostly of dividends paid on ordinary shares amounting to R515.3 million.

During fiscal year 2022, the net cash outflow consisted mostly of dividends paid on ordinary shares amounting to R513.3 million.

45


Cash and cash equivalents

    Cash and cash equivalents as at June 30, 2023 amounted to R2,471.4 million compared to R2,525.6 million at the end of fiscal year 2022. Substantially all of our cash and cash equivalents balances were denominated in South African rand. Cash and cash equivalent denominated in foreign currency amounted to USD 3.7 million at June 30, 2023 compared to USD 3.4 million at the end of fiscal year 2022.
    
    Cash and cash equivalents as at June 30, 2023 includes restricted cash related to guarantees of R11.4 million compared to R10.7 million at the end of fiscal year 2022.

    At September 30, 2023, our cash and cash equivalents were R1,498.3 million.

Borrowings and funding

At June 30, 2023 and September 30, 2023, we had no external sources of capital. Pursuant to the Group having started to evaluate its funding structure for its expanded budgeted capital expenditure programme in future years, a decision was made to not renew the RCF in September 2022.

Anticipated funding requirements and sources

    Our cash and cash equivalents are set out above under “Cash and cash equivalents”. Management believes that existing cash resources, net cash generated from operations and long term finance options available for long term capital projects will be sufficient to meet the anticipated commitments of our existing operations for fiscal year 2024 which expected to be approximately R3.5 billion. As a result of the sustained high rand gold price, at September 30, 2023 the Group has a cash and cash equivalents balance of R1,498.3 million after paying a final dividend of R559.4 and incurring capital expenditure of R597.0 during the first quarter of fiscal year 2023. Liquidity has been enhanced by the continued high rand gold price levels.


5C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

    DRDGOLD has a dedicated team that looks at ways and means of improving recoveries. While the team remains active with an ongoing focus on improving extraction efficiencies, the projects undertaken during the year ended June 30, 2023 were focused on optimizing the existing facilities rather than implementing new technologies to improve extraction efficiencies. We have no registered patents or licenses.


5D. TREND INFORMATION

Any sustained decline in the market price of gold from the current elevated gold price levels would adversely affect us, and any decline in the price of gold below the cost of production could result in the closure of some or all of our operations which would result in significant costs and expenditure, such as, incurring retrenchment costs earlier than expected which could lead to a decline in profits, or losses. In addition, as most of our production costs are in rands, while gold is sold in dollars and then converted to rands, our results of operation and financial condition have been and could be in the future materially affected by an appreciation in the value of the rand. Accordingly, any sustained decline in the dollar price of gold and/or the strengthening of the South African rand against the dollar would negatively and adversely affect our business, operating results and financial condition.
    
    For the fiscal year 2024, we are planning Group gold production of between 165,000 (5,132kg) to 175,000 (5,443kg) ounces at cash operating unit cost of approximately R770,000 per kilogram and expect a capital investment of approximately R3.5 billion.

Reconciliation of budgeted cost of sales to budgeted cash operating costs (R’million)
Cost of sales
4,371.8
Reconciling items 1
(307.6)
Cash operating costs 2
4,064.2
1Includes expected depreciation of R262.6 million, ongoing environmental expenses of R43.9 million and care and maintenance expenses of R1.1 million
2 See glossary of terms for definition
Rounding of figures may result in computational discrepancies
Our ability to meet the full year’s production target could be impacted in a number of ways, including stoppages in production due to power interruptions and other risks (refer Item 3D. Risk Factors—Risks related to our business and operations and “–Forward Looking Statements”). We are also subject to cost pressures in the event of above inflation increases in labor, key consumables, diesel, steel and cyanide. Unforeseen changes in ore grades and recoveries, unexpected changes in the quality or quantity of reserves and resource, technical production issues, environmental and industrial accidents, gold theft, environmental factors and pollution could adversely impact the production, sales and cash operating costs for fiscal year 2024 and cause us to fail to meet our targets for the year.

    Refer to Item 5A.: “Key drivers of our operating results and principal factors affecting our operating results” for a discussion of the trends in the US Dollar gold price as well as exchange rates impacting our business.

    Set forth below is our summary results for the first quarter of fiscal year 2024. This information has not been audited.


46


Operating results for the quarter ended September 30, 2023
Quarter endedQuarter ended
September 30, 2023June 30, 2023% change
Production
Gold producedkg1,2841,222%
oz41,28139,288%
Gold soldkg1,2671,222%
oz40,73539,288%
Ore milledMetric (000't)5,6324,97213 %
YieldMetric (g/t)0.2280.246(7 %)
Reconciliation of adjusted EBITDA (R'million)
Profit for the period257.3258.2
Income tax80.4232.0
Profit before tax337.7490.2
Finance expense17.221.4
Finance income(64.2)(107.4)
Results from operating activities290.7404.2
Depreciation72.257.6
Share based payment expense6.35.7
Change in estimate of environmental rehabilitation recognised in profit or loss(7.1)
Gain on disposal of property, plant and equipment(10.3)
Loss on disposal of property, plant and equipment
0.1
IFRS 16 Lease payments 1
(4.5)(4.5)
Exploration expenses and transaction costs1.01.4
Adjusted EBITDA 1,2*
365.8447.0